* Hungary's consumer prices keeps rising on food, commodity
* Slovak inflation hits 2-yr highs, trade swings to surplus
* Czech, Hungary's Q4 GDP revised down a touch
By Martin Santa
BRATISLAVA, March 11 (Reuters) - Rising food and energy
costs drove prices higher in Hungary and Slovakia in February,
while the Czechs downgraded end-2010 growth figures because of
weak domestic demand in the face of government spending cuts.
Policymakers across central and Eastern Europe are faced
with the challenge of trying to rein in inflation while also
revitalising weak consumer activity that has so far seen little
benefit from a blistering industrial recovery.
Hungary's inflation edged up to 4.1 percent in February, a
tad below expectations but a bit higher than January's 4.0
percent, and analysts blamed high commodity prices on the rise.
In neighbouring euro zone member Slovakia, price growth
accelerated 0.3 percent on a monthly basis to hit a two year
high of 3.3 percent year-on-year, meeting market expectations.
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Hungary's central bank has hiked interest rates three times
since November to 6 percent, and said on Thursday it would not
allow an inflationary spiral to resume. But, with two new rate
setters appointed to the bank's board this month, analysts
expect the bank to keep rates stable in the near term.
"The tendency is in line with regional and global trends,"
Akos Kuti, an analyst with Equilor in Budapest said. "The
central bank is likely to keep rates on hold in March, partly
due to changes in the Monetary Council," he added.
Investors are on the lookout for policy statements from the
region's central bankers following an unexpected statement last
week from European Central Bank President Jean Claude Trichet
signalling a hike to euro zone interest rates will come in
April.
In Poland, inflation unexpectedly hit a 21-month high in
January, and market watchers expect the Monetary Policy council
to raise interest rates by a quarter point to 4.25 percent on
April 5.
But to the south, Czech consumer prices rose less than
expected in January, cooling bets that the central bank will
rush to raise interest rates. []
REGIONAL RECOVERY ONGOING, PACES DIFFER
Prague and Budapest revised downward their fourth quarter
economic growth data, with a fast recovery in manufacturing
based on foreign orders being checked by weak demand from
consumers at home.
The export-driven Czech economy expanded by a real 2.6
percent in the last three months of 2010, but was marked by 0.4
and 1.6 percent drops in household and government spending and a
2.3 percent drop in gross fixed capital formation.
The figure was lower than a previous 2.9 percent estimate
and contrasted sharply with a 16.8 percent spike in exports, a
figure that almost matched January's output figures
[]
Raiffeisenbank analyst Helen Horska said the main reason for
the slowdown in Czech growth was due to the centre-right
government's efforts to cut the budget deficit.
"Weak domestic demand continues to be the reason for the
slowdown in the Czech economy," she said.
"The government continued in its belt-tightening policy
which was reflected in government consumption, at households of
state clerks, as well in construction."
Hungary revised down its fourth quarter gross domestic
product growth figures to 1.9 percent, from a previous estimate
of 2 percent.
There, too, household consumption dropped by 0.4 percent on
the year, while government consumption was down 7.6 percent.
Analysts said despite price growth accelerating on the back of
high oil and food prices, underlying prices were subdued.
"Headline inflation could increase a bit further in the
coming months as domestic food products replace imported ones,
but the below 2 percent a core inflation level shows that
demand-driven inflation is low," said Gyorgy Jaos Barcza from
K&H bank.
(Reporting by Prague, Budapest and Bratislava bureaus; Editing
by Toby Chopra)
