July inflation data marks significant negative change

HUNGARY - In Brief 08 Aug 2018 by Istvan Racz
CPI-inflation was reported at 0.3% mom, 3.4% yoy for July, the yoy rate up from 3.1% in June. Analysts in Portfolio.hu's poll expected 3.3%, and the MNB predicted 3.3% for average CPI-inflation in Q3 in its June inflation report.Note: Yoy changes in percent; Sources: KSH, own estimatesThe big deal about the July data is that defying former MNB explanations that the recent uptrend in the yoy headline rate had to do only with fuel prices, this time around all of the existing core indices moved upwards or significantly upwards. Non-fuel inflation rose to 2.3% yoy from 2.1% in June, due to +0.3% in July only (we expected 0.1% for that, in line with the usual seasonal pattern). Core inflation rose to 2.5% from June's 2.4%, and the MNB's three adjusted core inflation rates rose to 2.3-2.7% yoy from 2.1-2.4% in the previous month. Prices rose once again on fuel inflation (0.9% mom, 17.8% yoy) AND increases in the area of industrial products as well as market-regulated services.Note: Yoy changes in percent; Sources: KSH, MNBThe MNB has only given a technical explanation on what happened, its policy level has remained silent so far.

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