(Repeats story published late on Thursday)
* Polish annual CPI up in Dec at 3.5 pct vs Nov 3.3 pct
* 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) - Inflation in Central Europe
picked up in December, but analysts see no urgency for central
banks to hike rates as economic recovery is slow and weak
household demand is expected to weigh on prices.
According to figures published on Thursday, annual inflation
rose in Bulgaria, Hungary and Poland.
Czech data also 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.
Central European assets have firmed this year on hopes for
economic recovery, relatively high yields and expectations for
continuing interest rate cuts in Hungary and Romania.
The new data confirmed that the Czech and Polish central
banks are under no pressure to start hiking their key interest
rates which stand at 1.0 percent and 3.5 percent respectively,
and Hungary's bank could cut its 6.25 percent base rate further.
The rise in inflation was caused by various factors and not
a general increase in price pressures: tobacco and energy prices
and a low base in Hungary, transport costs in Poland, services
and non-food items in Bulgaria.
Annual inflation rose to 5.6 percent in Hungary from 5.2 in
November, to 3.5 percent from 3.3 in Poland, and a still-low 0.6
percent in Bulgaria after 0.1 percent decline. Czech inflation
rose to 1.0 percent from 0.5 according to earlier figures.
Polish and Hungarian figures were slightly below forecasts.
Poland has been the only European Union member to escape
recession as its strong internal market helped the economy grow
by about 1.6 percent last year, but demand-led price pressures
are still lower than before the global crisis, analysts said.
NO RATE HIKES SOON
The figures underpin that the Polish central bank is
unlikely to start to reverse its earlier rate cuts before late
this year, analysts said.
"If there are no strong signs of (inflation) rising,
interest rates may stay on hold until the end of the year," said
Jaroslaw Janecki of Societe Generale in Warsaw.
Hungary's annual core inflation, calculated without volatile
fuel and food prices, eased to 4.8 percent from 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.
The NBH cited recession, which cuts demand in the economy,
as a key factor which justified a combined 3.25 percentage point
reduction in its base rate since July. Hungary's economy
contracted 7.1 percent in the third quarter of last year.
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 and Andy
Bruce)
