Yesss! CPI-inflation reported sharply down in May

HUNGARY - In Brief 08 Jun 2023 by Istvan Racz

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The headline rates were -0.4% mom, 21.5% yoy, the latter down from 24% yoy in April, and the first time since November 2020 that consumer prices fell on a monthly basis. Core inflation was a significantly less impressive +0.5% mom, but the year-on-year rate still fell markedly, to 22.8% in May from 24.8% in April. Non-fuel inflation, which we estimate from KSH data, was 0.1% mom, 21.6% yoy, the latter down from 23.6% in April. Note: Year-on-year changes in percent; Sources: KSH, own estimates The key contributors to this positive result were really high base period data (1.7% mom headline, 2.2% mom core in May 2022), almost fully stable food prices (+0.1% mom), due to the positive impact of good weather on seasonal items and a correction in previously overpriced areas (meat, milk & dairy, etc.) given weak demand, falling fuel prices (-6.6% mom), and the KSH's now usual monthly adjustment of the consumer basket in terms of the structure of gas consumption (between subsidised and non-subsidised), as a result of which the average price of gas sold to households fell by 6.4% mom in a single month, without the price tags actually changing. This latter item could be legitimately regarded as pure methodology, rather than actual change, but its impact on the overall CPI was just -0.15% in May. The fact that all year-on-year indicators fell substantially was no surprise at all, but by how much they did so was indeed unexpected. The average analyst expectation was 22.2% yoy in Portfolio.hu's poll, and as the owner of the poll wrote this morning, none of the analysts participating in the survey expected less than 22% yoy. Well, this latter one was certainly true for us, but it wa...