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HUNGARY: Headline CPI Expected to Increase After Meeting Target in September

HUNGARY
CEEMEAEM BulletBulletGlobalEmerging Market NewsHungaryRegion

CPI data for October is on the docket tomorrow morning (07:30GMT/08:30CET), though the print is unlikely to have any near-term policy implications given that ongoing HUF weakness has already closed the door to potential rate cuts in the remainder of the year. As per the Bloomberg survey, the headline inflation figure is seen rising to +3.5% Y/Y from +3.0% in October. Sell-side analyst views below:

  • Goldman Sachs expect headline CPI to rise to +3.5% Y/Y, noting that the rise almost entirely reflects base effects in the fuel, energy and food categories of the CPI basket. Beyond base effects, fuel prices rose in Hungary in October and the forint has weakened in the past month, which is likely to raise the sequential pace of inflation somewhat, they add.
  • ING expect the headline figure to rise again in October. Food, fuel and consumer durables prices will be the main drivers of the acceleration. According to their estimates, annual food inflation will reach its highest level yet in 2024. With such a mix, ING see core inflation returning to the 5% mark.
  • UniCredit expect inflation to have increased to 3.5% Y/Y. On a monthly basis, the increase is expected to be 0.4%. Regarding core inflation, there is a risk of the annual figure rising above 5%, but their baseline remains at 4.9%. UniCredit have increased their end-2025 CPI expectation from 3.9% to 4.6% and do not expect core CPI to vary significantly from the 4-5% range until July 2025.
  • These new unfavorable CPI developments, together with the increased forward rate expectations, are likely to cancel all of the NBH’s rate-cutting ambitions perhaps even until July next year, UniCredit add. Moreover, if the bearish market sentiment towards the HUF does not improve, the NBH might even be forced to tighten monetary conditions in the next few months. 
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CPI data for October is on the docket tomorrow morning (07:30GMT/08:30CET), though the print is unlikely to have any near-term policy implications given that ongoing HUF weakness has already closed the door to potential rate cuts in the remainder of the year. As per the Bloomberg survey, the headline inflation figure is seen rising to +3.5% Y/Y from +3.0% in October. Sell-side analyst views below:

  • Goldman Sachs expect headline CPI to rise to +3.5% Y/Y, noting that the rise almost entirely reflects base effects in the fuel, energy and food categories of the CPI basket. Beyond base effects, fuel prices rose in Hungary in October and the forint has weakened in the past month, which is likely to raise the sequential pace of inflation somewhat, they add.
  • ING expect the headline figure to rise again in October. Food, fuel and consumer durables prices will be the main drivers of the acceleration. According to their estimates, annual food inflation will reach its highest level yet in 2024. With such a mix, ING see core inflation returning to the 5% mark.
  • UniCredit expect inflation to have increased to 3.5% Y/Y. On a monthly basis, the increase is expected to be 0.4%. Regarding core inflation, there is a risk of the annual figure rising above 5%, but their baseline remains at 4.9%. UniCredit have increased their end-2025 CPI expectation from 3.9% to 4.6% and do not expect core CPI to vary significantly from the 4-5% range until July 2025.
  • These new unfavorable CPI developments, together with the increased forward rate expectations, are likely to cancel all of the NBH’s rate-cutting ambitions perhaps even until July next year, UniCredit add. Moreover, if the bearish market sentiment towards the HUF does not improve, the NBH might even be forced to tighten monetary conditions in the next few months.