CPI-inflation above expectation in January, but analysts still believe this may be the cyclical peak

HUNGARY - In Brief 10 Feb 2023 by Istvan Racz

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January CPI-inflation came out this morning at 2.3% mom, 25.7% yoy, the latter up from 24.5% yoy in December. Core inflation was 1.8% mom, 25.4% yoy, meaning that the year-on-year core rate fell below the headline rate for the first time since last February. Non-fuel inflation was 24.6% yoy, more moderately up from the 24.2% yoy of December. Note: Yoy changes in %; Source: KSH The headline rate was markedly above analyst expectation, the median of which was 25% yoy, despite a warning from the economy minister a few days ago that "it may pay a short visit to above 25% in January". We expected something between 25-25.5% yoy. But even so, the actual figures do not look tragically bad. Please, note that the residual impact of the fuel price deregulation carried out on December 6 added 0.6-0.7%-points (estimated somewhat lower earlier, but the weight of fuels in the consumer basket was raised from January). This was the main reason why the headline rate got above the core rate in January. In addition, the 1.8% monthly rate of non-fuel inflation was not disappointingly high compared to the 1.4% actual measured in January last year, which was still a pre-war period. Finally, food inflation, the key driver behind the rapid rise by consumer prices, failed to accelerate further in January; rather, it decelerated marginally, to 44% yoy from 44.8% in December, following the most recent trend of agricultural producer prices. In conclusion, we still believe that the January figures may, with a reasonably high chance, represent the cyclical peak of consumer inflation. This is pretty much the current consensus view among analysts, who expect slowly decreasing headline rates in the for...