Hungary’s inflation rate dropped to the lowest level in a year as an prolonged recession limited the room to raise prices.

Consumer prices rose an annual 16.4% in August, the statistics office said on Friday, the lowest level since August of 2022. The data slightly exceeded the 16.3% median estimate in a Bloomberg survey and compares with a 17.6% inflation rate in July. Prices rose 0.7% from the previous month.

Hungary’s economy has been contracting for four consecutive quarters, reducing disposable income and slowing the highest inflation rate in the European Union for a seventh month. The government estimates that price-growth may drop to single-digit territory in the fourth quarter.

The slower pace of inflation allowed the central bank to start cutting its EU-high key interest rate in May in monthly steps of 100 basis points, taking the level to 14% currently from a peak of 18%.

While policymakers have penciled in another full percentage point reduction for this month, Deputy Governor Barnabas Virag warned last week that the central bank’s would no longer be on “autopilot” beyond that. Further monetary easing would be “data-driven” and “cautious and gradual” in approach, he said.