Hungarian headline inflation likely to remain in range between 2 pct and 2.2 pct until April 2018

The Hungarian headline inflation decelerated on a year-on-year basis in October to 2.2 percent from September’s 2.5 percent. This is a bit below the market projection of 2.3 percent year-on-year. The fuel price mainly drove the moderation due to the base effect. Product groups, which had recorded substantial price rise last year, did not record anything this year. The tradable goods and product goods mainly led to the moderation of core inflation to 2.7 percent year-on-year in October from September’s 2.9 percent.

According to a KBC Market Research report, the headline inflation is expected to stay in the range between 2 percent year-on-year and 2.2 percent year-on-year till April 2018, which might be followed by some acceleration close to 3 percent at end of second quarter of 2018 and above 3 percent year-on-year in the fourth quarter of 2018. This inflation orbit underpins the National Bank of Hungary to keep its easy monetary policy till the election will be held in April-May 2018. Regulated price were kept at very low level since 2013, and therefore there is a risk that after the election some adjustment of this price group is required, which might push up inflation at the end of next year and in 2019, stated KBC Market Research.

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