Headline Inflation Expected to Edge Higher to +4.8% Y/Y in Jan

CPI data is due shortly (07:30GMT/08:30CET), where annual price growth is expected to accelerate to +4.8% Y/Y in January from +4.6% in December, as per the Bloomberg survey. A further acceleration is also anticipated by the NBH, with disinflation expected to begin thereafter. Given inflation will likely be above both the NBH’s forecasted range for 2025 and the upper bound of its target range, another ‘hold’ appears very likely at the Feb 25 rate decision, in-line with the central bank’s cautious approach to monetary policy.

• Goldman Sachs expect headline CPI to rise to +4.8% y/y. They note that January inflation prints tend to be subject to outsized volatility and cyclicality, as firms reevaluate pricing at the beginning of the year and the HCSO re-estimates CPI weights. The uncertainty around this ‘January effect’ is larger than usual this year, as excise taxes have been hiked across a number of tax categories.
• ING expect headline inflation to be 0.9% and core inflation to be 0.6% on a monthly basis. With such a strong monthly repricing, both headline and core inflation will be close to 5% y/y, they say. That strength suggests that the recent hawkish shift in the central bank's forward guidance will be vindicated by the data.
• JP Morgan note that inflation likely moved up a decimal in January to 4.7%, with risks skewed for a slightly larger move to 4.8%. They estimate NBH core CPI to have been flat at 4.7%, whereas the alternative measure without processed food likely climbed higher to 5.1% from 4.9%.