Hungarian CPI data is on the docket tomorrow morning (0730BST/0830CET). Consensus sees the headline figure falling to 20.1% y/y from 21.5% in May. The monthly figure is seen rising 0.3% m/m from a print of -0.4% prior.

• Goldman Sachs forecast inflation to decrease from 21.5% y/y to 20.0% y/y. A favourable base effect in food is likely to be the main source of lower annual headline inflation, they say. However, in recent months they have also seen an improvement in the sequential momentum in both core and non-core factors which, if sustained, will bode well for the NBH to continue with its process of policy normalisation.
• Regarding the relatively high gap in headline inflation y/y with Hungary’s CEE peers, Goldman Sachs think that as we go through H2, the gap will narrow substantially as the delayed base effects in energy inflation will begin to push Hungarian inflation lower. Beyond the near-term, Goldman Sachs remain concerned that the underlying strength in wage growth will question whether inflation will return to the central bank target in a sustained manner.
• UniCredit say inflation probably fell to 20.3% y/y in June, with disinflation accelerating for food, energy and services prices. They expect inflation to fall to the single digits by November, with the NBH continuing to cut the O/N deposit rate, which they see at 12% by the end of the year.