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HUNGARY: Headline CPI Moderates to +3.0% Y/Y, Core Rises to +4.8%

HUNGARY
CEEMEAEM BulletBulletGlobalEmerging Market NewsHungaryRegion
  • Hungary’s consumer prices rose 3.0% y/y in September (Est: +3.1%) versus +3.4% in August, according to the Central Statistical Office. On a month-on-month basis, consumer prices fell 0.1% (Est: 0%) versus unchanged in August.
  • Given much of the decline was expected to be on the back of falling fuel prices, greater focus prior to the release was on the core reading, which came in at +4.8% y/y (Prior: +4.6%), roughly in-line with sell-side estimates.
  • Among the sub-categories, motor fuel prices decreased by 3.7% m/m, while food became 1.0% more expensive and services prices 0.8% lower on average.
  • The benign reading will be welcomed by policymakers, though Deputy Governor Barnabas Virag has sought to ease expectations of further rate cuts in the coming months. According to Bloomberg, he told an investor call on Tuesday that the room for a rate cut in October had narrowed due to geopolitical risks such as the US elections and escalating Middle East tensions.
  • Indeed, HUF FRAs indicated that money markets are pricing in a less-aggressive easing cycle, with the 3x6 contract up around 30bps on the month.

Figure 1: Hungary Inflation Radar 

Source: Hungarian Statistics Office

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  • Hungary’s consumer prices rose 3.0% y/y in September (Est: +3.1%) versus +3.4% in August, according to the Central Statistical Office. On a month-on-month basis, consumer prices fell 0.1% (Est: 0%) versus unchanged in August.
  • Given much of the decline was expected to be on the back of falling fuel prices, greater focus prior to the release was on the core reading, which came in at +4.8% y/y (Prior: +4.6%), roughly in-line with sell-side estimates.
  • Among the sub-categories, motor fuel prices decreased by 3.7% m/m, while food became 1.0% more expensive and services prices 0.8% lower on average.
  • The benign reading will be welcomed by policymakers, though Deputy Governor Barnabas Virag has sought to ease expectations of further rate cuts in the coming months. According to Bloomberg, he told an investor call on Tuesday that the room for a rate cut in October had narrowed due to geopolitical risks such as the US elections and escalating Middle East tensions.
  • Indeed, HUF FRAs indicated that money markets are pricing in a less-aggressive easing cycle, with the 3x6 contract up around 30bps on the month.

Figure 1: Hungary Inflation Radar 

Source: Hungarian Statistics Office