* Hungary Dec CPI up 5.6 pct y/y vs Nov +5.2 pct
* Bulgaria CPI +0.6 pct y/y vs -0.1 pct in Nov
* Czechs revise output down, to 0.1 pct Nov y/y fall
By Sandor Peto
BUDAPEST, Jan 14 (Reuters) - Hungarian and Bulgarian data on
Thursday flagged a pick-up in inflation in Central Europe late
last year but analysts saw no urgency for central banks to hike
rates as weak household demand is expected to weigh on prices.
Czech figures pointed to a weak domestic economy as revised
November industrial output fell 0.1 percent in annual terms,
reversing preliminary data that had shown the first growth in
more than a year.
Those, and other recent economic data show the Czech central
bank is also under no pressure to start hiking its record low
rate of 1.0 percent as recovery remains slow.
Central European assets have firmed this year, lifted by
hopes for a recovery in the region's export markets, relatively
high yields and expectations for continuing interest rate cuts
in Hungary and Romania.
Hungary's annual inflation rose to 5.6 percent in December
from 5.2 percent in November.
But the figure was a shade lower than expected and the rise
was mainly caused by a rise in energy prices relative to a low
base in late 2008 and a one-off increase in tobacco prices due
to an excise tax hike. []
Core inflation, calculated without volatile fuel and food
prices, eased to 4.8 percent from November's 5.0 percent.
The central bank (NBH) overshot its three percent inflation
target after tax increases from July last year but the goal
could be reached this year as recession cuts demand and keeps
inflation pressure low, analysts said.
Gergely Suppan of Takarekbank said inflation could start to
decline from February and Thursday's figures strengthened rather
than weakened the arguments of the central bank's (NBH) doves.
"The market is pricing in a 50 basis point (NBH interest
rate) cut, but now that they have shifted to 25 (in Dec), I
think they will advance in 25 basis point steps," he said.
Bulgaria's consumer prices rose by a still-low 0.6 percent
on the year in December after 0.1 percent decline in November,
pushed up by rising costs of services and non-food items.
Bulgaria's GDP fell by 5.4 percent year-on-year in the third
quarter of last year. Hungary's economic contraction was even
bigger in the same period, 7.1 percent.
CZECH RATES SEEN ON HOLD
The Czech Republic, where the economy shrank 4.1 percent in
the third quarter, could return to growth earlier than Hungary
but the revised November output figures showed recovery is slow
as the export outlook may improve but domestic demand is low.
The annual decline in Czech retail sales accelerated in
November to 4.9 percent from 4.7 percent in October, according
to figures published on Wednesday.
"It is turning out that while industry can gradually pull
itself out of a recession and have better results thanks to
foreign demand, yesterday's retail sales showed that domestic
demand is in a deep downturn," said David Marek, chief analyst
at Patria Finance.
"This shows that there is no need to move with interest
rates, which can remain at the bottom for a long time," he said.
(Reporting by Sandor Peto, editing by Mike Peacock)
