CPI-inflation up sharply, exceeds analyst expectations in April

HUNGARY - In Brief 11 May 2021 by Istvan Racz

---

This morning, April CPI-inflation was reported at 0.8% mom, 5.1% yoy, the latter sharply up from 3.7% yoy in March. The headline rate was pushed up very substantially by rising fuel prices, which went up by 39.2% yoy in April after +17.7% yoy, despite a 1.2% mom decrease in the month, i.e. essentially on a big base effect, a 16.4% drop recorded back in April 2020. Analysts surveyed by Portfolio.hu expected 4.9% yoy on average, so the actual generally exceeded expectations, even though in this case the average forecast did not really represent a consensus view among the various contributors to the survey.The decisive role of fuel prices has been stressed by the MNB's brief analysis as well. But we would note here that non-fuel inflation was also quite high in April, with 0.9% mom, 3.1% yoy, the latter up from 2.7% yoy in the previous month, breaking the preceding 7-month downward trend of this indicator. For sure, this pick-up could have represented partially an early spillover from fuel to non-fuel prices, but it is notable that the monthly increase of consumer prices accelerated in all of services, clothing, beverages and tobacco and non-durable, non-food household items.As a technical-looking change, the KSH is omitting beverages and tobacco from core inflation starting this month, and they have come forward with a recalculated time series as well, just as the MNB has done with its own adjusted core inflation indicators. The KSH is explaining its move as a methodology adjustment to follow the 'best European practice', a reference to Eurostat. The MNB is only saying that the omission of beverages and tobacco is not affecting its main adjusted core series significantly...