CPI - April CPI – Fuel Causes Further Increase

April inflation was 3.9%, up from 3.7% a month earlier. Core inflation fell to 3.7% from 3.9%.

HEADLINE AND CORE INFLATION (YOY)

Source: CSO, Concorde

The headline inflation rose chiefly on a rise in fuel prices.

CONTRIBUTION TO THE RISE IN CORE CPI* (PPS)

Source: MNB, Concorde; *Cumulative since trough in July 2016

The core inflation stalled, though the seasonally adjusted core has risen somewhat further. Recent months indicate a growing importance of services and processed food contribution to the core indicator (shown in the previous graph), making the impression that price pressures could be getting more stubborn.

MNB’s alternative core indicators reflect a pause in the previous uphill climb in the underlying inflation pressure. That said, the (growing) trend in the underlying inflationary indicators remain intact. The closely watched net core inflation fell from 3.5% in March to 3.4% in April, remaining in the region described earlier by the MNB as ‘to be watched’ closely regarding its implication for the perseverance of inflation pressure / compatibility with price stability.

HEADLINE AND UNDERLYING INFLATION (YOY)

Source: MNB

Market services price increase was outstanding in April relative to seasonal patterns. The price increase was not attributable to a single item, was relatively widespread.

MARKET SERVICES PRICES (M-O-M)

Source: KSH, Concorde

April showed that market services prices less the telco contribution grew further, reaching a y-o-y growth of 4.7%, clearly indicating the pass through of wage increases. The indicator rose from 1.7% in early 2016.

MARKET SERVICES PRICES (M-O-M)

Source: KSH, Concorde

Unprocessed food prices rose to 9.4% from 9.3% on an annual basis, primarily caused by the help of statistical base effect (eggs) and a rise in prices of pig meat. Regarding processed food prices, we can see a modest increase.

We see the May CPI to rise marginally to 4%.

Further risks to the CPI forecast stem from several directions: uncertain future of telco price competition (downside risk); uncertain crude outlook (upside risk), and the potential impact of global energy prices on regulated energy prices.

Due to the recent steep rise in the global crude prices, we bring up our yearly average CPI forecast to 3.5% (from the previous 3.1%), and the yearend forecast to reach 4.5%, up from the  previous 3.7%

 

 

 

 

 

Hai Thanh Le Phuong, CFA
Head of Research

CONCORDE SECURITIES LTD.

Alkotás Point
50 Alkotás street, H-1123 Budapest.
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MEMBER OF THE CONCORDE GROUP

 

 

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