London analysts put March CPI at 2.5-2.6%


Hungary's year-on-year consumer price index probably fell to 2.5-2.6% in March from 2.8% in February, London-based analysts told MTI. Analysts for investment banking group Barclays put March CPI at 2.5%, but noted that some factors bringing inflation down were probably temporary, such as a government mandated reduction in household energy prices. Core inflation, which excludes volatile fuel and food prices, also likely slowed because of weak domestic demand and base effects, they added. Barclays' analysts said inflation left room for another 1.00 percentage point reduction in the National Bank of Hungary's base rate from 5.00% at present. Emerging market analysts at Morgan Stanley's London unit also estimated March CPI reached 2.5%. The analysts noted that real interest rates in Hungary are still among the highest in a global comparison of emerging economies, but said it was still too early to say how steep the MNB's easing cycle would be. The analysts projected the forint would come under pressure during the rest of the year and put the currency at 320 to the euro at year-end. JP Morgan's emerging market analysts in London put March CPI at 2.6%, attributing the decline to fuel prices and the base effect of increases in excise taxes on spirits and tobacco. The index could fall further in April and remain low even in Q3 mainly because of utilities price cuts, they added. The analysts projected a 50bp rate cut by mid-year, but saw the rate remaining at 4.50% till the end of 2014.


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