DATA SNAP:Hungary July CPI Up Less Than Seen,Despite Tax Hike

BUDAPEST -- Hungarian inflation accelerated in July, but by less than analysts had expected, as only part of July 1 value-added and excise tax increases seeped through to the readings, the central statistics office, or KSH, said Tuesday.

When adjusted to exclude the impact of the tax increases, consumer prices showed a 2.1% monthly decline in July, and a rise of 1.4% from a year earlier.

"Interest rates may be reduced further, consistent with the inflation-targeting framework, if trend inflation developments don't jeopardize price stability and if risk perceptions allow it," the central bank's Monetary Policy Council said in a statement in July, when it slashed the key rate by a bigger-than-expected 100 basis points to 8.50% for the first time in six months.

Headline inflation, which includes the impact of the tax increases, was 1.3% on the month and 5.1% on the year in July. The annual reading, while a sharp acceleration from June's 3.7%, came in lower than the average forecast of 14 bank economists polled by Dow Jones Newswires for 6.2%.