In April 2016, consumer prices rose by 0.2 percent year-on-year, which signals a stable, benign inflationary environment. Price stability has helped preserve the value of wages and pensions, but it has also been facilitating consumption growth.

Inflation has been subdued, thanks to disinflation in Europe and low oil prices. The largest effect has been caused by falling oil prices, which reduced the index significantly, by 0.9 percent, even despite last month’s price rise. Lower oil prices have had an even larger impact through ripple effects that led to lower transport and other services prices.

Besides favourable oil prices, low inflation across Europe has also had a positive effect, mainly through modest food and industrial product prices. Hungarian statistics were also influenced by the reduction of VAT on pork that has resulted in 17.8 percent drop in pork prices compared to the level one year ago.

Together with the 0.2 percent increase in April, prices rose altogether by 0.3 percent in the initial four months of this year. For the entire year, the Ministry for National Economy is expecting an inflation rate of 0.4 percent, as predicted in the Convergence Programme.

(Ministry for National Economy)