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COUNTRY INSIGHTS

Yesss! CPI-inflation reported sharply down in May
HUNGARY · In Brief · 08 Jun 2023

The headline rates were -0.4% mom, 21.5% yoy, the latter down from 24% yoy in April, and the first time since November 2020 that consumer prices fell on a monthly basis. Core inflation was a significantly less impressive +0.5% mom, but the year-on-year rate still fell markedly, to 22.8% in May fr...

Industrial output fell further markedly in April
HUNGARY · In Brief · 07 Jun 2023

Industrial output shrank by 2.5% mom, 5.6% yoy in April, on seasonally and day-adjusted basis, following a 3.8% yoy decrease in Q1. This marks a downtrend that has been there since an all-time peak of output in September 2022. The level of output was 8.6% lower in April than at the September peak...

A rather poor but unsurprising retail sales figure in April
HUNGARY · In Brief · 06 Jun 2023

Retail sales fell by 0.9% mom, 12.1% yoy on seasonally and day-adjusted basis in April. Previously, it decreased by 12.8% yoy in March and by 8.5% yoy in the whole of Q1. Overall, retail sales dropped by 10.4% yoy in the first four months of 2023. This sounds like a rather poor performance indeed...

Another government intervention in interest rate policy
HUNGARY · In Brief · 01 Jun 2023

Today's story is not so much the fact that the European Parliament approved a resolution asking the EU Council to find a way to avoid Hungary's six-month presidency in the EU in H2 2024, a critical period right after the election for the EP, due in June next year. That is something for the EU and...

Past the peak of the inflation and interest rate cycle
HUNGARY · Report · 24 May 2023

Following a peak in January and roughly unchanged levels in the rest of Q1, CPI-inflation fell materially in April at last. This new pace of downward movement is likely to become a trend in the next two months and to accelerate further in Q3. We still believe that single-digit inflation by Decemb...

The MNB started to reduce the O/N deposit rate with a 100 bps first step today
HUNGARY · In Brief · 23 May 2023

The Monetary Council's decision was to reduce the sterilisation rate, which is the O/N deposit rate, by 100 bps to 17%, after keeping it unchanged at 18% since October 14 last year. The repo rate, which is the ceiling for the MNB's interest rate corridor, was reduced accordingly, by 100 bps to 19...

First MNB sterilisation rate cut more likely in June than next Tuesday
HUNGARY · In Brief · 19 May 2023

The forint has weakened somewhat over the last 24 hours, giving back from its impressive strength seen in recent weeks. Two reasons are widely mentioned: USD strengthening against EUR, and the upcoming Monetary Council meeting early next week (Tuesday, May 23), when many on the market think the M...

A mild recession has been reported for Q1 this morning
HUNGARY · In Brief · 16 May 2023

GDP fell by 0.2% qoq, 1.1% yoy in volume terms, according to KSH's preliminary data. This was the third consecutive quarter with negative quarterly growth, as according to downwardly revised numbers, GDP fell by 0.6% qoq in Q4 and by 0.8% qoq in Q3 2022. Analysts in Portfolio.hu's poll expected -...

Analysts guessed correctly, CPI-inflation indeed fell materially in April
HUNGARY · In Brief · 10 May 2023

This time around, the analyst consensus, or more accurately the median analyst forecast in Portfolio.hu's poll, proved completely right: April CPI-inflation was reported at 0.7% mom, 24.0% yoy, the latter down from 25.2% in the previous month and from the 25.7% yoy recorded in January. This was t...

April CPI-inflation due tomorrow, first significant move downwards expected
HUNGARY · In Brief · 09 May 2023

The median analyst, by Portfolio.hu's poll, expects 0.7% mom, 24% yoy, the latter down from 25.2% yoy in March. We are even more optimistic than this, expecting 0.8% mom for non-fuel inflation and -3.4% mom for fuels, the latter being an estimated actual, based on hontankoljak.net's data, a local...

Weak industry and retail sales data reported for March
HUNGARY · In Brief · 05 May 2023

Industrial output, on seasonally adjusted basis, rose by 0.2% mom and fell by 3.8% yoy in March. This also meant a 3.8% yoy reduction of the production volume in Q1. The following chart shows the monthly development of the relationship between output, the EURHUF exchange rate and producer prices,...

Reforms to increase judicial independence has been approved by parliament, but implications on the availability of EU grants remain unclear
HUNGARY · In Brief · 04 May 2023

The National Assembly approved the government's reform package to increase the independence of courts yesterday, as required by the EU Commission for Hungary to gain access to a big part of its currently blocked development grant quotas from the EU. This came after a long series of detailed talks...

A deal has been reached with the EU on Ukrainian agricultural exports into the CEE
HUNGARY · In Brief · 03 May 2023

A few weeks ago, Hungary, following Poland and followed a bit later on by Slovakia, unilaterally banned the imports of Ukrainian agricultural goods, claiming that the removal of quantitative quotas and tariffs by the EU after the start of the war had resulted in heavily increased quantities of im...

A scary net wages figure was reported for February
HUNGARY · In Brief · 26 Apr 2023 · 1 response

The net (after-tax) wages of full-time employees rose by 0.8% yoy in nominal terms in February. This implies a 19.6% yoy drop by real net wages. Yes, indeed, real wages fell by one-fifth compared to February 2022. For the first two months of this year, the corresponding figures were 7.9% yoy grow...

O/N repo rate down to 20.5% at today's rate-setting meeting
HUNGARY · In Brief · 25 Apr 2023

The Monetary Council reduced the O/N repo rate, the ceiling of the MNB's interest rate corridor, from 25% to 20.5% today, maintaining some scope for a potential upward adjustment of the 18% sterilisation rate, in case of a necessity to do so. This fell quite close to analyst expectation, which wa...

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