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City analysts put April CPI at 4.6%

Hungary's consumer inflation is likely to have remained flat or slightly accelerated in April, London-based emerging markets analysts said prior to the Wednesday data release.

In an Econews poll of nine major City-based investment banks and financial consultancies - Bank of America-Merrill Lynch Global Research, UBS, 4cast, Morgan Stanley, Moody's Analytics, Capital Economics, Barclays Capital, JP Morgan, Goldman Sachs -, forecasts varied in a narrow 4.5-4.7% range, averaging at 4.61% after a 4.5% annual headline rate in March.

At the top of the forecast range seeing last month's headline inflation at 4.7%, analysts at 4cast said that additional pressure is once again expected from fuels, though "far less dramatic" than a month earlier. "Of course, the key factor of uncertainty is food, in particular processed food where beyond the temporary effects of the sugar price shocks, broad-based pressures seem creeping in, potentially signaling a delayed pass-through of past shocks".

If confirmed, "this should raise some eyebrows within the MPC". At the same time, the "tame" wage trend should leave the prices of market services - a key proxy for inflation expectations - on a subdued trend and the relatively strong forint is still a good cushion on industrial durables and non-durables, 4cast said.

On a similar note, Goldman Sachs said it expects that Hungarian headline inflation will have accelerated to 4.7% in April on the back of continued increase in food, energy, and fuel prices, and higher core inflation, rising as a result of earlier supply-side shocks. Given that domestic demand is still weak, services and other goods prices should continue to lag headline inflation. In the next months, however, inflation is likely to rise even further as supply-side shocks continue to affect the headline rate and pass through to core inflation, analysts at Goldman Sachs say.