Analysts: Hungary’s CPI nears 1% threshold last month


Hungaryʼs annual headline consumer inflation is likely to have reached, or even breached, the 1% threshold last month largely on the back of base effects, London-based emerging markets economists said late yesterday prior to today’s data release, according to Hungarian news agency MTI.

The consensus forecast is calling for a 1.2% year-on-year headline rate for January after a 0.9% print in December.

At the lower edge of the forecast range, Royal Bank of Scotlandʼs analysts said they expect Hungaryʼs year-on-year CPI to be at 1%, on a 0.1% month-on-month decline. “The main source of the downside pressure this month, on our estimates, will come from a nearly 5% month-on-month drop in petrol pump prices and from the reduction of the VAT rate on pork meat from 27% to 5%”, they added.

Analysts at JP Morgan said that despite the large oil price decline and the resulting drag on headline CPI in January, they project that inflation rose to 1.1% in Hungary. The higher trend mostly reflects food inflation, but base effects also play a role, they added.

At the top end of the forecast range and significantly above consensus, London-based economists at Goldman Sachs said that despite a recent slowdown in the pace of reflation, they expect Hungarian inflation to have accelerated to about 1.7% year-on-year last month. The large increase is mainly due to base effects, reflecting an earlier round of utility price cuts.

“Low fuel prices remained, in our view, the key disinflationary factor (...) Volatile food prices could (also) lead to a downside surprise in the January prints”, Goldman Sachsʼs analysts said.


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