CPI - July CPI – Shows Relief In Inflation Pressure

July inflation was 3.3%, down 0.1pps from a month earlier. Core inflation fell 3.7% from 3.8% a month earlier.

HEADLINE AND CORE INFLATION (YOY)

Source: CSO, Concorde

The headline inflation fell marginally hand-in-hand with core prices. The recent slowdown in core inflation was visible in the central bank’s underlying inflation indicators, too. The closely watched net core inflation fell to 3.2% from the peak of 3.7% reached in May, still above the level (3%) 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 muted in the last two months, bucking the trend visible in the prior months.

MARKET SERVICES PRICES (M-O-M)

Source: KSH, Concorde

Unprocessed food prices’ inflation rose to 11.7%, from 10.9% on an annual basis, primarily caused by potato and egg prices, implying that the overall pressure in this segment may be transitory given the narrow impact.

We see the August  CPI to rise marginally to 3.5%.

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.

We forecast average CPI to reach 3.5%, and the yearend forecast is 4.3%

 

 

 

 

Hai Thanh Le Phuong, CFA
Head of Research

CONCORDE SECURITIES LTD.

Alkotás Point
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