Hungary c.bank underlying inflation indicators also show increase on every front

Hungary's inflation surged to a nearly 26-year high of 20.1% yr/yr in September 2022, while core inflation went up to 20.7% from 19% in Aug, the Central Statistical Office (KSH) reported on Tuesday.

Shortly after, the central bank (MNB) has published its underlying inflation indicators, according to which core inflation adjusted for indirect tax effects stood at 20.6%, while demand-sensitive inflation went up to 15.4% and sticky-price inflation to 16.2% in Sept.

The bank said a rise in regulated products and services and food prices accounted for over 50% of inflation in September.

Two product groups account for almost 85% of the 4.5 percentage-point increase in inflation: regulated prices contributed by 2.8 percentage points and food prices by 1.0 percentage point to the pick-up in the consumer price index. Core inflation rose by 1.7 percentage points relative to the previous month. The increase in core inflation was largely driven by processed food prices (0.9 percentage points), the MNB added.

The monthly rise in core inflation calculated excluding processed food prices, which better reflects market developments, declined to 1.1 percent following the repricing of 1.7 percent in August, i.e. a moderation in inflation developments has been seen in this product group, the bank said as a positive note.

The indicators, measuring households’ inflation expectations, showed unusually high volatility. The indicators rose in September compared to the previous month. However, expectations for retail sales prices declined sharply, while business price expectations for services fell slightly.

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