Hungarian inflation surprisingly falls in March, NBH to maintain loose monetary policy

Hungary’s consumer price inflation slowed to 2.7 percent year-on-year in March, the Central Statistical Office (KSH) said in a first reading of data today. Data missed market expectations for a reading at 3.0-3.1 percent and compared to the previous month’s rise of 2.9 percent. The Hungarian inflation for March came out below expectations and is likely to keep room for the NBH to maintain loose monetary policy.

The KSHʼs seasonally adjusted core inflation, which excludes volatile fuel and food prices, was 1.8 percent year-on-year, unchanged from February. The indicator for core inflation, excluding indirect tax effects, was 1.9 percent in February, rising from 1.8 percent the previous month.

Of the underlying measures, the indicator for demand-sensitive inflation, which excludes processed foods from core inflation, was 1.5 percent, edging down from 1.6 percent, while the indicator for sticky price inflation, which includes items for which retail prices vary, on average, no more than 15 percent a month, rose from 1.9 to 2.0 percent.

"In March, it was mainly changes in the prices of more volatile items with greater sensitivity to cost changes, i.e. food and energy, that had an upward effect on prices," the MNB said. "Households’ inflation expectations have been broadly unchanged in recent months and remained at moderate levels, in line with underlying inflation developments," it added.