Analysts expect 15.7% yoy (median forecast) CPI-inflation for August

HUNGARY - In Brief 07 Sep 2022 by Istvan Racz

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KSH is set to report the August CPI-inflation data tomorrow. Portfolio.hu's analyst survey shows that participants have been under the influence of the MNB's latest statement, according to which the headline inflation rate is likely to have gone to 15-16% yoy in August, following 13.7% yoy in July. Clearly, the MNB's forecast must have been based on the assumption that only some one-third of the impact of the government's latest measures to increase the retail prices of fuels, electricity and gas will be reflected in the August data, and so inflation should rise further sharply in September because of the rest of the impact appearing in the index. The same analyst survey as the one mentioned above contains a median expectation of 20.5% yoy inflation in December (largely realistic), to be followed by 5.6% yoy only in December 2023 (wishful thinking). Analysts also expect 14.1% average inflation for this year and 13.5% for 2023. Originally, this year's government budget was based on the assumption of 3% inflation and the 2023 budget expected 5.2% inflation only. So clearly, the budget can count only very substantial extra revenue because of higher inflation, even though the 4.1% forecast for next year's real GDP growth appears to be grossly unrealistic now. These extras plus the impact of recent government measures to tighten fiscal policy will have to provide compensation for the fiscal cost of high energy prices, the currently unknown but quite likely fallout of large amounts of incoming EU transfers, the legally required inflation compensation to old-age pensioners, increasing debt costs, and whatever else the government may find important or even unavoidable to provi...