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Inflation 5.5 percent in December, 17.6 percent in 2023

Annual inflation in Hungary was 5.5 percent in December, while it averaged 17.6 percent in 2023, the Central Statistical Office (KSH) said on Friday. Month on month, inflation fell by 0.3 percent.

Food prices increased by 4.8 percent, while household energy prices went down by 13.9 percent.

Services prices were up 12.4 percent, while consumer durables fell by 1.0 percent.

The full year annual reading for food prices was a rise of 25.9 percent, while household energy went up by 22.1 percent.

Economic development minister Marton Nagy said in a statement that the government had, two month ahead of schedule, fulfilled its promise to cut inflation, and the 5.5 percent annual inflation reported in December was better than the relevant figures in the Czech Republic (6.9 percent), Poland (6.1 percent) and Romania (6.6 percent).

The month-on-month decrease of 0.3 percent was also significant in December, with a drop in the prices of food, household energy and vehicle fuel, he added.

Nagy said the government would now focus “on the main task of 2024” of restoring economic growth. In order to achieve GDP growth of around 4 percent, he said progress must be made in three areas: increasing public consumption, domestic production and investment, and the activity rate of the labour market must grow from the current 78 percent to 85 percent for 15-64 year-olds, he added.

Given 5.5 percent inflation and the central bank base rate in December set at 10.75 percent, the real interest rate, he noted, is still above 5 percent, “which continues to impact negatively on economic performance”.

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