August CPI data marks no change in inflation prospects

HUNGARY - In Brief 09 Sep 2025 by Istvan Racz

---

The headline rate was 0% mom, 4.3% yoy, the latter unchanged from the previous month. Core inflation moved a bit down, to 3.9% yoy from July's 4% yoy, whereas non-fuel inflation rose a bit, to 5% yoy in August from 4.9% yoy in the previous month.Note: Yoy changes in percent, data right of the vertical magenta bar represents own forecast; Sources: KSH, own estimatesThese figures are neither good nor bad. They are just normal, fitting to the usual seasonal pattern (no change in average food prices in August) and exactly meeting the median analyst expectation.Essentially, the headline rate was held down by decreasing fuel prices (-0.8% mom, -4.3% yoy). One could say that well, those are excluded from core inflation, which still fell marginally. But there is no such thing as full exclusion of fuel prices. The second-round impact is substantial in fuels' case, and that is certainly included in core prices.Please, note that households' consumption expenditure (purchased consumption) grew by 4.9% yoy in Q2, significantly more than one could have thought on the basis of a 3.1% yoy expansion of retail sales turnover in the same period. The difference came mainly from services. Please, also note that the administrative caps on retail margins of selected food items and household goods have been extended for another three months, through end-November. The new expiration date is merely a formality: these measures will be most likely maintained until after the election at least. Most lately, the MNB estimated that these caps had a 1.3%-point one-time impact on the CPI, and are likely to reduce the average headline inflation rate by 0.8%-point in 2025. Please, also note the existence...