Update: CPI-inflation in October

HUNGARY - In Brief 13 Nov 2024 by Istvan Racz

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Regarding our note on October's good-looking inflation data, unfortunately we have found no good explanation, official, anecdotal or anything, on KSH's reporting a 6.8% mom decrease of the prices of telephone and internet services. Simply speaking, we see no announcements, news, anecdotal reports that people would have had to pay less for the services delivered in October. These were still up by 9% yoy, after a major upward adjustment in March, especially as one major service provider was known to be significantly loss-making at the time. These services represent 2.5% of the consumer basket, and so the one-month impact on the CPI is a material 0.015-0.2%-point. Should we exclude this from the data, the October CPI would have been 3.4% yoy, exactly as the MNB (and ourselves) predicted, and just 0.1%-point below the analyst median expectation. Core inflation would have been 4.7% yoy, still below the previous month's 4.8% and the 5% figure seen in the MNB's forecast table. For sure, we do not exclude the possibility that some sort of proper explanation, the kind that could not be found in the MNB's quick analysis of the data or from KSH themselves yesterday, may be provided, in which case we will report about it immediately. Anyway, the conclusion on monetary policy prospects is not changed by this case: we do not see scope for any further base rate cut in the rest of 2024.