An unsurprising rise by yoy CPI-inflation surprisingly surprised analysts

HUNGARY - In Brief 08 Sep 2021 by Istvan Racz

---

We apologise for this somewhat complicated title, but this was really weird a bit. As reported earlier today, the headline rate of CPI-inflation rose back to 4.9% yoy in August from 4.6% yoy in July. Portfolio.hu's analyst 'consensus' (in fact the median expectation) was 4.7% yoy, so yes, analysts also expected some upward correction, but only a marginal one. To their credit, fuel prices rose by a bit more (0.8% mom) than the rate that could be derived from the interim reports from MOL, the main distributor of fuels in Hungary (0.1% mom). This had some impact (about +0.05%) on the CPI, but even so, the median expectation of analysts still appeared to be in line with 0.1% mom non-fuel inflation, i.e. unchanged from last August, which was a bit of an optimistic forecast. Instead, the monthly rate of non-fuel inflation came out at 0.2% mom, so the difference is no big deal, yet media reports are talking about a negative surprise, and the forint was depreciating (moderately) against the euro today. All this took place in the face of earlier MNB statements, which strongly suggested that the July drop was extraordinary, and an upward correction was likely to come.Once again, this story is probably no big deal, and is unlikely to have a long-lasting impact. Indeed, the August inflation data were pretty much business as usual, no great story in itself. Core inflation (and adjusted core inflation) edged up, from 3.5% yoy to 3.6% yoy, in August, and so did the MNB's other two core inflation indicators. So the key point probably is that inflationary pressures keep increasing moderately, as expected. Consequently, central bank policy will have to be tightened further. However, tra...