Data preview for tomorrow: CPI-inflation expected to have risen materially in October

HUNGARY - In Brief 11 Nov 2024 by Istvan Racz

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Here is once again the MNB's forecast chart from their latest post-meeting presentation of October 22, according to which the headline rate should go up to 3.4% yoy in October, from the cyclical low point (so far) of 3% in the preceding month: On this graph, the MNB also predicted 5% yoy core inflation for October, which would be up from the 4.8% yoy actual for September, However, for us it is unclear if they genuinely expected a rise for October or they just left their quarterly forecast figures unchanged (as the message of the quarterly forecast was that core inflation would likely stay unchanged at 5% yoy in October, and a few months further). Portfolio.hu's analyst poll's median expectation for the headline rate is 3.5% yoy, and analysts expect 4.4% yoy for end-2024. The key reason for the expected pick-up late this year is a base effect, namely the sharp decrease of fuel prices in late 2023. Our own forecast for October headline is the same as the MNB's 0.3% mom, 3.4% yoy, the monthly figure consisting of +2% mom for fuel prices (the unofficial preliminary estimate for this by the holtankoljak.hu commercial website was 2.2% mom), and +0.2% mom for non-fuel prices, the same as the actual was in October last year. By the way, analysts are starting to speculate under what conditions the MNB could resort to a base rate increase, to protect forint stability. So far, the consensus, if there is one, seems to be that the Bank will most likely wait until the dust settles a bit around the US presidential election, which may take a few months, honestly. We think that no base rate hike is likely until the threat of a really major negative move by the forint appears, meaning t...