November inflation: no surprise, no concern

HUNGARY - In Brief 08 Dec 2017 by Istvan Racz
The November CPI-inflation data is out this morning. The headline rate was 0.4% mom, 2.5% yoy, the latter up from 2.2% yoy in October. This was in line with the market consensus. Just as we wrote in a related note earlier this week, the upturn of the yoy headline rate should be no reason for concern for the MNB. It was due to fuel prices alone: non-fuel prices rose by 0.2% mom, 2.3% yoy in November, the monthly rate reflecting material inflation but not any higher than in the same month of 2016. Core inflation edged down by one decimal point to 2.6% yoy (and it remained unchanged on seasonally adjusted basis). The MNB's adjusted core rates similarly slid to 1.7-2.2% yoy from 1.8-2.3% yoy one month earlier. Indeed, the headline inflation rate may easily end up at slightly below the 2.4% yoy level, which the MNB predicted for the average in Q4 in its latest inflation report.The MNB is essentially certain to take this as a vindication of their relatively relaxed view on short-term inflation prospects.

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