Consumer Price Inflation Eases To +7.9% Y/Y

Hungarian CPI inflation fell to +7.9% Y/Y in November from +9.9% prior versus +8.0% expected. The sequential reading was 0.0%, slightly below October's +0.1% and the +0.1% median estimate.

• Prior to the release Goldman Sachs wrote that they expected headline CPI to fall to +8.0% y/y, largely on base effects – particularly in food inflation – but also reflecting a slowdown in underlying inflation dynamics. Looking ahead, they expected that the disinflation process would continue and that headline inflation will moderate to +6.0% y/y in December. Assuming HUF remains relatively stable, GS continued to expect a 75bp rate cut at the final meeting in December, bringing the policy rate to 10.75% by year-end.
• UniCredit said earlier this week that prices stagnated in November amid a decrease in fuel prices and a moderate increase in core prices. The yearly headline figure could come in at +8.1% y/y, they said. As a baseline case, UniCredit did not expect any change in the previously announced 75bp rate cut increment until February, even if price dynamics surprise to the downside. They expected the terminal rate for this year to be at 10.75% and at 7% next year.
• EUR/HUF has shown little reaction to the data so far, holding onto its earlier gains. The pair last deals at 382.57, after hitting its best levels since November 2.