Hungarian inflation accelerates to 22.5% y/y in Nov, seen rising further
By Krisztina Than
BUDAPEST, Dec 8 (Reuters) - Hungarian headline inflation HUCPIY=ECI picked up to an annual 22.5% in November from 21.1% in October, boosted by surging food and energy prices, while core inflation jumped to 24% from 22.3%, signalling strong price pressures in the economy.
Both readings came in above analysts' forecasts in a recent poll.
Hungarian inflation is expected to rise further in coming months as food inflation stays strong, while the government on Tuesday unexpectedly scrapped a price cap on car fuels amid a worsening shortage, which will add to pressure going forward.
Citigroup estimated the one-off CPI impact from scrapping the cap at 2.9 percentage points, lifting headline CPI close to 26% year-on-year in December and January, it said.
"Second round impacts may add further to service inflation, given that micro firms and entrepreneurs may also see higher costs. On the positive side, the abolishment of the price cap may help reduce fuel consumption and thereby contribute to a narrowing in Hungary’s current account gap," Citigroup said in a note.
It said annual inflation was expected to remain above 20% until July 2023.
"The fuel price shock and signs of wage acceleration may add to second round inflation risks, limiting the NBH’s room for cutting rates," it said.
Unrelenting price growth poses a challenge to the National Bank of Hungary which was forced to ramp up interest rates in October to stem sharp losses in the forint currency, even as the economy is slowing.
Food prices rose 43.8% year-on-year in November, household energy prices jumped 65.9% after the government curtailed utility bill subsidies, and consumer durables prices increased 14.4%. Services prices rose 9%.
The central bank has an inflation target of 3% with a tolerance band of a percentage point on either side of that.
Reporting by Krisztina Than; Editing by Crispian Balmer
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