CPI-inflation at 14-year record high in November

HUNGARY - In Brief 08 Dec 2021 by Istvan Racz

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November CPI-inflation was reported this morning at 0.7% mom, 7.4% yoy, the latter up from 6.5% in October. Core inflation was 0.7% mom, 5.3% yoy (up from the previous 4.7%), non-fuel inflation was 0.6% mom, 5.9% yoy (up from 5.2% in October). Fuel prices rose by 2% mom, 37.7% yoy, and their yoy rise accelerated from 30.7% yoy in October.In late September, the MNB's quarterly inflation report expected a 5.6% yoy headline rate for November. Yesterday, Portfolio.hu's analyst survey predicted 7.3% yoy. But in hindsight, analysts have not proven to be better longer-term predictors of inflation than the MNB. With 4.9% yoy CPI-inflation estimated for the Euro Area in November, there can be little doubt that much of current domestic inflation is imported. It is also clear that it is fuelled predominantly by energy prices, through the direct impact of fuel prices and the cost-push impact of all types of energy. Consumer demand seems to be a contributor as well but not by an awful lot: in Q3, households consumption expenditure rose by 10.1 yoy in nominal terms and by 4.7% yoy in real terms. This was substantial but much less than sufficient explanation for the existing inflation problem.A very substantial amount of producer price inflation has occurred lately, to a great extent because of the overlapping two main factors (imports and energy), and some other supply-side problems (eg. in agriculture). Latest figures have been 26.6% yoy rise by the producer prices of domestic industrial sales in October, 13% yoy rise by merchandise import prices in September, and a 23.6% yoy rise by agricultural producer prices also in September.For the next few months, the dynamics of CPI-inflati...