CPI-inflation reached a seven-year peak in December
CPI-inflation for December was reported at 0.3% mom, 4% yoy this morning. The yoy rate was up from 3.4% in November, and it was the highest number on record since December 2012. It was also marginally higher than the 3.9% yoy market consensus, which included us. But importantly, it exactly matched the forecast given by the MNB in its December inflation report.Core inflation retreated a bit in December, to 3.9% yoy from 4% in November, whereas adjusted core inflation, the main indicator to influence MNB policy fell to 3.5% yoy from 3.6% yoy in the previous month. As everyone expected, the yoy headline rate shot up in December on a fuel-price-related base effect: fuel prices rose by 0.3% mom, but this implied a sharp increase in the yoy rate, to 7.7% from exactly 0% in November. It seems very clear that the MNB will not change policy on this piece of news. If they did not get worried about the prospect of the headline rate (temporarily) reaching the ceiling of their tolerance range, why would they get worried when it became a fact just a few weeks later?