* Oct inflation 4.7 pct vs analysts' 5.0 pct fcast
* Inflation seen picking up on low base, fuel prices
* Benign Oct CPI data supports further rate cuts
(Updates with detail, statistics office quotes)
BUDAPEST, Nov 11 (Reuters) - Hungarian inflation slowed in October for the third month in a row as consumer durables led a wide decline in prices and merchants did not fully pass on an earlier government tax hike to customers.
Annual consumer price inflation
"Prices of consumer durables again dropped from the previous month," said Borbala Minary, a statistician at the Central Statistics Office.
"Merchants couldn't pass on the VAT hike in July to consumers and because the year-end typically is a season for special sales, it's a question whether the window of opportunity to (pass on the VAT hike) has closed."
Prices were flat on the previous month after a 0.1 percent drop in September while annual core inflation was down at 4.9 percent from 5.1 percent.
Inflation had been expected to rise sharply from July, when the government increased the main rate of the value added tax to 25 percent from 20 percent and lifted excise duties on key products, including car fuels, alcohol and tobacco.
But inflation accelerated by less than 1.5 percentage points in July and began to decline promptly as merchants did not pass on all of the tax hike to consumers, fearing weak retail sales amid the country's biggest recession in nearly two decades.
With the tax hike's muted impact, analysts now see inflation at 5.6 percent at the end of the year.
Similar downward pressures are felt around emerging Europe; prices in the Czech Republic actually declined in October, the first negative inflation reading since 2003. [ID:nL9689047]
Minary said inflation could accelerate toward the end of the year as fuel prices are set to increase steeply.
Analysts said the data supported expectations for further
rate cuts by the central bank which has cut the base rate
"This (October) figure provides a very favourable environment for rate cuts to continue, especially that markets have also settled down," said Gergely Suppan, analyst at Takarekbank.
The central bank last month said it could significantly undershoot its medium-term inflation target of 3 percent on the horizon influenced by monetary policy, and that the inflation outlook alone would require further monetary easing.
Central bank Governor Andras Simor said then that the scope for cuts would be determined by investors' appetite for riskier assets.
(Reporting by Marton Dunai; Editing by Victoria Main)