Inflation rose further, core inflation down on a base effect in April

HUNGARY - In Brief 09 May 2019 by Istvan Racz

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Well, the analyst consensus proved to be a bit too pessimistic, whereas we were a bit too optimistic about April's CPI-inflation data, as it turned out this morning. However, the crucial point is that essentially everyone was right to expect rising inflation for the month.Specifically, the headline rate was 0.9% mom, 3.9% yoy, the latter up from 3.7% in March and 2.7% in December. The yoy headline rate was also the highest number reported since December 2012. But importantly, all the acceleration seen in April was due to fuel prices, which jumped by 5.9% in a single month. Non-fuel inflation, also at a more than six-year peak, remained unchanged at 3.7% yoy, given its 0.5% monthly rate.An important fact is that core inflation (KSH), and adjusted core inflation (MNB), which were monotonously increasing between August 2018 and March this year, both moved down in April, from 3.9% yoy to 3.7% yoy and from 3.5% yoy to 3.4% yoy, respectively. Please, note, however, that this happened in both cases due to a base effect, given that in April 2018, core inflation (KSH) shot up sharply to a spike of 0.6% mom, which later proved to be the single highest monthly rate last year.Another notable fact is that food prices are also pumping up inflation, especially the headline rate, due to a heavy drought, which agricultural experts recently called the worst in the last twenty years. Even though we have just gone through a several days long rainy period, the first in several months' time, the situation is so bad that farmers are officially allowed to water their fields everywhere in the country, regardless the existence of a proper permission which they would be required to have under no...