The latest data showing that inflation was -0.2 percent last year also signal that the purchasing value of wages and pension benefits has increased, Minister of State for Public Finances Péter Benő Banai told public news channel M1.

Favourable inflation data were the result of low fuel prices and the third round of public utility price cuts implemented last year, he added.

Péter Benő Banai stressed that negative inflation in Hungary does not mean deflation: in case of deflation falling prices are the consequence of sluggish demand, but the economy performed well, it grew by more than 3 percent, the employment situation has improved and wages has risen in real terms. Negative inflation was rather the result of external factors, such as low fuel prices and Government measures.

The Minister of State noted that Hungary is currently one notch below investment grade category at all the three major credit rating institutions; one of them even attaches positive outlook to the country’s rating and that indicates a potential upgrade in the near future.

He also emphasised that investors of government securities have already “priced in” this expectation. Hungarian government securities are sold with so very low yields that make them similar to the securities of investment-grade countries. Sooner or later credit rating agencies must come to the same opinion that the European Commission, the International Monetary Fund or other analysts have.

(Ministry for National Economy)