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Sell-Side See Upside Risks from Services, Downside From Base Effects In March CPI

HUNGARY
EM BulletHomepagemarkets-real-timeBulletEmerging Market News
  • Goldman Sachs sees a below-consensus 3.3% Y/Y read, with base effects in core and food inflation and weak sequential pace throughout most items in the CPI basket. They see markets as having overestimated the stickiness of inflation as there have been seven downside inflation surprises and only one (small) upside surprise in the past eight months. They expect headline inflation to fall close to the mid-point of the target range in the coming months – in contrast to the MNB themselves, which expect headline inflation to remain flat before increasing above the target range.
  • They see this enabling the NBH to continue its cutting cycle and expect further Hungarian rate cuts to be delivered in H2.
  • ING write see another strong monthly repricing, with the third 0.7% M/M print in a row. They see services still as the main driver, especially holiday packages and telecoms. They see a further slight deceleration to 3.6% Y/Y due to the still relatively high base.
  • UniCredit expect inflation at 3.4%, below consensus, with core probably decreasing to close to the headline figure (3.6-3.8%). They see upside risks around service-price hikes (telecoms) and downside risks around the new, cheaper government tariff system for public transport.
  • Their forecast for year-end inflation of 5.7% remains unchanged, and they expect core prices to rise faster than L/T averages from April.
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  • Goldman Sachs sees a below-consensus 3.3% Y/Y read, with base effects in core and food inflation and weak sequential pace throughout most items in the CPI basket. They see markets as having overestimated the stickiness of inflation as there have been seven downside inflation surprises and only one (small) upside surprise in the past eight months. They expect headline inflation to fall close to the mid-point of the target range in the coming months – in contrast to the MNB themselves, which expect headline inflation to remain flat before increasing above the target range.
  • They see this enabling the NBH to continue its cutting cycle and expect further Hungarian rate cuts to be delivered in H2.
  • ING write see another strong monthly repricing, with the third 0.7% M/M print in a row. They see services still as the main driver, especially holiday packages and telecoms. They see a further slight deceleration to 3.6% Y/Y due to the still relatively high base.
  • UniCredit expect inflation at 3.4%, below consensus, with core probably decreasing to close to the headline figure (3.6-3.8%). They see upside risks around service-price hikes (telecoms) and downside risks around the new, cheaper government tariff system for public transport.
  • Their forecast for year-end inflation of 5.7% remains unchanged, and they expect core prices to rise faster than L/T averages from April.