Hungary: July inflation surprised to the upside - TDS

Analysts at TD Securities note that Hungary’s July inflation surprised to the upside posting the fastest growth rate since 2013 at 3.4% Y/Y (cons: 3.3% prior: 3.1%).

Key Quotes

“Though it rose further in July, price pressure still did not appear generalized - food prices accelerated to 3.6% but remained below the Jan-May 2018 levels; intoxicants eased to 5.3%; 'other goods including motor fuels and lubricants' accelerated to 7.5%; all other main categories exhibited inflation levels below the headline, including services (the largest weight in the basket) at 1.6%.”

“With food and fuel inflation being the main contributors to faster headline CPI, core data exhibited a more marginal acceleration to 2.46% Y/Y in July from a prior 2.42% - still a full percentage point below target.”

“SA sequential core inflation at 0.28% M/M points at an annualized level of 3.4%, a tad below target. However, the EU harmonized index suggests a faster annualized rate of 3.7% M/M, which is above target. Whichever number one takes, headroom for further acceleration is fully exhausted now, suggesting the NBH should consider resuming monetary tightening sooner than later.”