Hungary's CPI rises to 26-year high in November

Hungary's CPI rises to 26-year high in November
/ bne IntelliNews
By Tamas Csonka in Budapest December 9, 2022

Consumer prices in Hungary rose 22.5% y/y in November (chart), accelerating from a 21.1% increase in the previous month on higher household energy and food prices, the Central Statistics Office (KSH) said on December 8.

Analysts raised their full-year inflation forecasts after the report, which still does not include the impact of the phase-out of fuel price caps.

CPI rose 1.8% from the previous month. Core inflation, which excludes volatile fuel and food prices, accelerated to 23.8% in November from 22.2% in the previous month.

Inflation adjusted to a pensioner’s basket of goods and services was above the headline data at 25.2%.

Food prices rose 43.8% y/y, at the fastest clip in the EU, as the price of bread jumped 81.8%, egg prices climbed 102.9% and dairy products were 79.0% dearer.

The government earlier rolled back prices for a number of staples, including pork, cooking oil and flour, in an effort to dampen inflation. Household energy prices increased 65.9%, lifted by new consumption restrictions for regulated utilities prices in force from August 1.

Gas prices rose 124.3% and electricity prices climbed 28.3%. The data show consumer durable prices increased 14.4%. Prices in the category of goods that includes vehicle fuel rose 11.3%.

The data still reflect the impact of a 480/litre cap on motor fuel prices introduced on November 15, 2021. The cap was scrapped on Tuesday,

Prices of spirits and tobacco products increased by 13.8% and clothing prices rose by 8.0%.

Food prices contributed 0.8pp to the increase in headline inflation, while fuel prices reduced the rise by one-tenth of a percentage point because of the base effect, the Hungarian National Bank said in its monthly assessment. Indicators measuring households' inflation expectations showed "unusually high volatility" and continued to rise compared to the previous month, it added.

Analysts raised their full-year inflation forecasts after the report, which still does not include the impact of the phase-out of fuel price caps.

The phase-out of fuel price caps is expected to boost the headline figure by 2-2.5% and next month inflation could peak at 26%, Magyar Bankholding analyst Gergely Suppan said.

He warned of the impact of rising energy prices feeding through the supply chain to consumer prices, a major upside risk. The bank upped its annual average inflationary forecast for 2022 to 17.5% from 14.6%.

The implication of the inflation report on monetary policy is that the MNB will have little room to cut the 18% one-day deposit rate, which has become the effective rate from mid-October.

The outcome of the release of EU funds will also be vital before the central bank could start thinking about easing rates.

The Hungarian forint was trading 1% lower against the euro after the data at 417, its weakest level in two months against the euro, at 416.

 

Data

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