HUNGARY: Headline CPI Expected to Remain Above NBH Tolerance Range in September

CPI data is due at 07:30BST/08:30CET. Inflation trends are expected to be broadly unchanged in September, with consumer prices expected to remain stable on a monthly basis. The annual figure is expected to edge marginally higher, to 4.4% y/y from 4.3% in August, due to unfavourable base effects in fuel inflation. However, this is expected to be mostly offset by seasonally lower services prices, relatively benign food price inflation (owing to the government’s profit cap measures), and lower imported good prices amid the stronger forint.

• Goldman Sachs expect headline inflation to be unchanged at 4.3% y/y. They note that there is upward pressure from base effects in fuel inflation, and outside of this, they expect most categories of the CPI basket to be soft, especially tradeables inflation, reflecting the appreciation of the forint throughout the year.
• ING expect the headline inflation rate to continue to be contained by the government’s price shield measures, with prices remaining stable on a monthly basis. Seasonality (mainly in services and clothing) will drive core inflation down, ING say, but they also expect the stronger forint to have a downward impact on imported goods prices.
• JP Morgan expect headline CPI to tick only marginally higher to 4.4%. They say food inflation likely dropped to 2.7% y/y from 3.9%, but they expect fuel inflation to provide an offset having likely increased to -0.6% y/y from -3.1%. Core CPI likely moved roughly sideways: in the NBH’s main metric, JPM see a tick lower to 3.5% y/y from 3.6%, but in the alternative measure (which also excludes processed food) they see the opposite, an increase to 4.0% y/y.