Analysts: Hungary CPI to accelerate despite soft March data

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Hungary's consumer inflation is set to jump higher later this year on the back of base effects stemming from the previous utility price cuts, London-based emerging markets economists said after softer-than-expected CPI data for March had been released on Friday. Consumer prices rose just 0.1% last month from March 2013 after a similar year-on-year headline CPI print in February. London-based analysts had expected a slight acceleration in March, with forecasts varying in a narrow 0.2%-0.4% range.

Economists at Goldman Sachs said after the data release that they still expect inflation to increase moderately from here in the second quarter, albeit from a lower level, as base effects reduce the disinflationary impact of the utility price cuts.

“We expect inflation to stay below 1% for most of the year but expect a sharper acceleration at end-2014 to early 2015, as base effects related to the second round of utility price cuts push headline higher (...) Barring additional regulatory price cuts, inflation should reach the (3% medium-term) target in 2015.”

Analysts at JP Morgan said that inflation is likely to drift higher in the coming months and will jump above 2% year-on-year in December.

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