Headline CPI-inflation to have risen again in March

HUNGARY - In Brief 07 Apr 2019 by Istvan Racz
CPI-inflation data for March is due on Tuesday, April 9. Following 0.6% mom, 3.1% yoy for the headline rate in February, we expect 0.5% mom, 3.5% yoy, i.e. the year-on-year rate to pull away from the 3% target in the upward direction.Much of this would be due to fuel prices, which we see at +2.5% mom, in the wake of an actual 3.1% mom rise by the wholesale prices of fuel in March. Regarding non-fuel consumer inflation, our forecast is 0.3% mom, up marginally from 0.2% mom in March 2018, in view of continued heavy wage pressures (+10.6 yoy for gross wages in January) and robust growth by retail sales (8.4% yoy in February). This would make the yoy non-fuel inflation rate rise to 3.6% in March from 3.5% in February.At the moment, we expect the headline rate at 4% yoy in December 2019, coupled with a non-fuel inflation rate of 4.2% yoy. This takes into account the MNB's relaxed approach to monetary tightening, including the recent revision of their core inflation forecast (adjusted for the impact of indirect taxes) to 3.6% yoy, as the average for Q4 2019.

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