Good inflation figure reported for November

HUNGARY - In Brief 09 Dec 2023 by Istvan Racz

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The KSH published the November CPI-inflation data yesterday. We skipped the day without releasing a note on it for two reasons: 1) Essentially everything came out as expected; and 2) The Hungarian analyst was busy surviving the first few days of his now regular once-a-year hit from Covid, apparently not without success, thank God. On the more important one of these two subjects, the headline rate was reported at 0% mom, 7.9% yoy, the latter following 9.9%  in October. Core inflation was 0.3% mom, 9.1% yoy, down from 10.9% previously, and non-fuel inflation was 0.3% mom, 6.7% yoy, the latter falling from 8.4% in the previous month. Some analysts and parts of the media referring to them presented this monthly result as another pleasant surprise, but we think it is a bit of an exaggeration. The analyst median expectation was 8% yoy, as we wrote of it two days ago, and the difference between the actual and that forecast was just too little to count materially. We would day it was just another set of good data, after which the yoy headline rate may continue its march safely down to the December analyst median of 6.2% yoy or even lower.  The day before yesterday, we gave a 6% yoy forecast for December, but since then, we have reviewed the most recent history of wholesale domestic fuel prices, coming to the conclusion that the December headline rate may be even as good as 5.9% yoy. It seems that energy prices were behaving unexpectedly well since a peak reached in late September: Urals, the kind Hungary buys from the east (Russia and Kazakhstan) has retreated to $57/Bbl, below the magic $60 line, and even TTF gas fell to €39/MWh, a level which indeed was not hoped for just a ...