Expect the headline inflation rate to jump to around 20% in tomorrow's report

HUNGARY - In Brief 10 Oct 2022 by Istvan Racz

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The September CPI-inflation data is expected tomorrow. There can be little doubt that the headline rate will make far its biggest jump seen in the country's recent economic history, up from the 15.6% yoy figure recorded for August. This is because now the full impact of the August administrative price increases of public utility services such as gas and electricity should be included. Last time Mr. Virág of the MNB spoke, he said the MNB expects the September headline rate around 20% yoy. So it is no great surprise the the median expectation of Portfolio.hu's analyst poll is exactly that figure. Analysts also gave forecasts for December in this poll, with a median expectation of 20.6% yoy, before the headline rate shrinking back to the high single-digit area by end-2023. We do not claim to be smarter than the crowd this time. Our September figure, probably as good as anyone else's, is 19.6%, and we expect 20.2% yoy for December, the headline rate prospectively peaking immediately before the one-year anniversary of the war in Ukraine in early 2023. This latter part assumes no political earthquakes bigger than what is seen already in the war or major landslides around the European energy situation. Other than this, the forint is super-weak today. The domestic press tends to point to a record high trade deficit in August. They should not, as Hungary had to pay out its so far highest monthly gas bill in that month, because of the midsummer peak of prices in Rotterdam, the latter having fallen to less than half since then. They could also mention a very nice cash budget figure just reported for September, but they do not do so, as it would run counter to the logic of the ca...