London analysts: Lower inflation forecast for Hungary

Food

London-based analysts at JP Morgan and Morgan Stanley both lowered their Hungarian inflation forecasts yesterday for next year, Hungarian news agency MTI reported this morning.

Analysts at JP Morgan expect Hungarian inflation to be at 2.1% at the end of 2016, lower than their earlier 2.3% forecast. JP Morgan left their prediction of 2.5% inflation for 2017 unchanged.

JP Morgan said lower inflation numbers in October and November made them reconsider their earlier forecast. The new forecast also takes into account lower inflationary pressure from retail food prices, a slowdown in economic growth and a persistent negative output gap. If oil prices decrease further that could prompt even smaller inflation than currently forecast.

Morgan Stanley also lowered its inflation forecast based on low oil prices and a weaker than expected Hungarian inflation dynamic.

Analysts at Morgan Stanley predicts 1.7% inflation in 2016 and 2.6% for 2017, lower than the earlier 2.3% forecast for next year and the 2.7% forecast for the year after that.

Morgan Stanley also cut its economic growth forecast because of an expected slowdown in the utilization of European Union funding. GDP could expand by 2.6% this year, by 2.2% in 2016 and by 2.5% in 2017. The earlier GDP growth expectations were 2.9%, 2.4% and 2.6% respectively.

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