New macro data and an important statement from the MNB

HUNGARY - In Brief 14 Jan 2021 by Istvan Racz

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Really in brief, a few quite favorable new numbers are out, and the MNB has just said it is not planning policy changes in short term.In more detail, December CPI-inflation has been reported at 2.7% yoy, unchanged from the previous month. This means, of course, that the headline rate ended 2020 slightly below the medium-term target. The details are a bit more colourful, as core inflation rose to 4% yoy from November's 3.9%, just at the upper end of the MNB tolerance range, and the central bank's adjusted core inflation also rose marginally, to 3.4% yoy from the previous 3.3%. This time around, it was food prices which kept the headline rate low, whereas fuel prices pushed it up somewhat: non-fuel inflation actually fell to 3.1% yoy from November's 3.3%.In other news, construction output unexpectedly jumped 12.1% mom in November, probably in a great part due to relatively mild weather conditions during the fall. On yoy basis, output actually grew by 4.1% in the same month. This may also be a temporary uptick, in view of a marked base effect. But the best part of this story is that one would have expected falling output, as the 2nd wave lockdown rule took affect just before mid-November.In addition, the November BOP was published, reflecting a growing merchandise trade surplus. The balance on services also improved, and so the total trade surplus reached 3.1% of GDP in January-November, moderately off the 3.9% reported one year earlier. The current account (0.8% of GDP) and net capital transfers (2.2% of GDP) were both in surplus over the same period, and even the otherwise unfavourable errors and omissions deficit moderated somewhat compared to last year. Net external f...