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Analysts put average annual inflation at 5.3-5.6%

Analysts projected Hungary's average annual inflation would reach 5.3-5.6% this year on Wednesday, after the Central Statistics Office (KSH) published fresh CPI for March.

Consumer prices rose 5.5% yr/yr in March, slowing from 5.9% in February, KSH said in the morning.


Takarékbank senior analyst Gergely Suppan said CPI could stay close to 5.5% until the middle of the year because of higher food prices, in part as a result of new regulations for poultry farmers, before falling to 4.5-5% on base effects by the end of the year. He put average annual inflation at 5.3%.


Suppan said CPI could fall to the National Bank of Hungary's 3% "price stability" target by the second quarter of 2013, requiring no monetary tightening. He added that any rate cuts would depend on an agreement on precautionary financial assistance Hungary is seeking from the International Monetary Fund and the European Union. If an agreement is reached with the IMF and EU, the base rate could fall by 50bp to 6.50% by year-end, he said.


ING analyst David Németh said the inflation rate could slow to 5.3% by April but rise again in the summer because of base effects. He put year-end CPI around 5% and projected average annual inflation of 5.5-5.6%.


Németh said rate-setters would probably take a wait-and-see approach to monetary policy because of worsening sentiment on global markets. He added that the central bank's 3% CPI target could be met in 2013. 


In its fresh Quarterly Inflation Report published at the end of March, the National Bank of Hungary put average annual inflation at 5.6% for 2012, up from 5.0% in the previous forecast. The MNB also raised its average annual inflation projection for 2013, to 3.0% from 2.6%, and expects the rate to fall to 3% in H1 next year.