CIB sees upward inflation risk in wage growth


An analysis by CIB Group observes that in the trend of inflation, the intensification of domestic demand and the effects of wage hikes continue to appear more slowly than expected, primarily due to demand emerging in the housing market. However, it adds, the ongoing rise in wages still represents a source of upward risk.

In an analysis sent to the Budapest Business Journal, CIB says the upward risk is also present due to international oil prices, though even with the last few months’ rise domestic fuel price growth remained below average.

Based on CIBʼs forecast, inflation is set to rise somewhat during the summer months, but still with year-on-year figures below 3%. Annual average inflation is likely to arrive close to the 2017 figure of 2.4%, while a sustained breach of the 3% inflation target is not projected.

CIB does not expect monetary tightening in this period. The lax monetary policy of the European Central Bank (ECB) also supports Hungary’s monetary room for maneuver, while the communications of the National Bank of Hungary (MNB) also reflect a strong commitment to loose monetary conditions, the analysis adds.

At the same time, non-conventional MNB measures and changes in the monetary toolkit may be on the agenda, CIB notes.

Underlying inflation stable - MNB

In its own monthly analysis released after the publication of April inflation data by the Central Statistical Office (KSH), the MNB said its measures of underlying inflation developments only "rose slightly" in April from the previous month.

"The measures continued to be at or around 2% and remained below the level of core inflation," it noted.

The indicator for core inflation excluding the effects of indirect taxes stood at 2.2% in April, edging up from 2.1% in the previous month.

The indicator for demand-sensitive inflation, which excludes processed foods from core inflation, rose from 1.8% to 1.9%.

The indicator for sticky price inflation, which includes items for which retail prices vary, on average, no more than 15% a month, increased from 2.1% to 2.3%.

Householdsʼ inflationary expectations "remained at moderate levels" during the month, the central bank said.

MOL Renovates Base Storing Strategic Kerosene Reserves Energy Trade

MOL Renovates Base Storing Strategic Kerosene Reserves

EC Advances Infringement Procedure Over Hungary's Sovereignt... EU

EC Advances Infringement Procedure Over Hungary's Sovereignt...

Hell Energy Inaugurates HUF 80 bln Capacity Expansion Manufacturing

Hell Energy Inaugurates HUF 80 bln Capacity Expansion

Puskás Arena to Host 2026 Champions League Final In Budapest

Puskás Arena to Host 2026 Champions League Final


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.