??? Comparedto February, consumer prices rose 0.8% in March, while the 12-month inflationrate accelerated to 9% (after 8.8% published for February). The figures were inline with our expectations and the market consensus.

 ??? Food prices rose 0.7% m/m, basicallyas it was expected. As usual in March, prices of clothes increased by 2.2% m/m,due to the appearance of new spring collections. Prices of durable goodsfurther decreased, by 0.2% on monthly term, due to the effects of the forintstrengthening. Household energy prices rose 0.5% m/m, among which the 5.3%monthly increase in electricity prices was the most significant. Prices of ???othergoods of and fuels??? were up by 1.4% m/m, basically due to the 3.6% increase infuel prices.

 ??? The seasonally adjusted coreinflation rose 0.4% m/m. The 12-month core CPI rate slightly accelerated to 6%(from 5.8% y/y in February).

 ??? Now, majority of the previouslyannounced administrative price increases seem to have been accounted for in thefirst quarter. The March 12 month index may have been the inflation peak thisyear. But there are some uncertainties around food prices and further increasein fuel prices are taking place in April. In addition, there will be anincrease in rail and long distance travel prices (from the reduction of budget subsidies)in May. Due to these factors, the 12-month CPI inflation rate is not likely toslow significantly down in the coming months; it may fluctuate around thecurrent high level. More spectacular drop will come in September, with the12-month rate slowing down to 5.2% by December.

 ??? Market reaction: neutral,slightly positive.