ECO ECONOMY-Czech and Hungarian inflation jumped in April

May 10 (Reuters)Czech headline inflation hit its highest level in nearly three decades in April, while prices in Hungary also beat forecasts as inflationary pressures kept pressure on policymakers in central Europe.

Central banks in both countries have been raising interest rates for nearly a year and, like others in the region, they are showing a willingness to continue to tighten policy to contain rising inflation.

Rising commodity and energy prices following Russia’s invasion of Ukraine fueled Czech price pressures amid rising wages and still pent-up consumer demand after the COVID-induced lockdowns end.

Tuesday’s latest round of inflation data from the region will do little to shake expectations of higher interest rates.

The year-on-year Czech inflation rate jumped to 14.2%, above expectations and the highest since December 1993.

Analysts expect a further rise ahead.

The data follows a bigger-than-expected 75 basis point hike by the Czech National Bank last week that pushed the base rate CZCBIR=ECI to 5.75%, its highest level since 1999. Markets expect a further 75 basis point hike when policymakers meet again next month.

In Hungary, where the government has sought to use fuel price caps and other measures to dampen soaring prices, headline inflation accelerated to 9.5% year-on-year in April, its highest level since June 2001.

David Nemeth, an analyst at KH Bank, said Hungary’s central bank would continue to raise rates but needed to be reasonable so as not to stifle the economy.

“At the moment, the supply shock is large and it cannot be contained in the short term, no matter how fast the rate hikes come, it would only strangle the economy,” he said. he declared.

(Reporting by Jason Hovet in Prague and Krisztina Than in Budapest; Editing by Emelia Sithole-Matarise)

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Laura T. Thrasher