Prices rose by 3.7% in November

Based on the monthly price changes, prices for the main food group, which accounts for more than 30% of the consumer basket, rose by 0.9%, following a 0.7% increase in the previous month, which we had expected to be less expensive. Fuel prices rose by 2.4% in November, which was higher than we had expected. The main group of other articles, which also includes vehicle fuels and has a weight of 19%, saw a price increase of 0.8% after a 0.2% increase in October. Household energy prices rose by 0.4%, and alcoholic beverages and tobacco products had to be paid 0.3% more. The price increase of clothing items came down from 3% to 0.9%, and the Central Statistical Office registered a price decrease of 0.3% in the case of durable consumer goods. The cost of services increased by an average of 0.2% in the month under review. The price of telephone and internet services, which had recently decreased by 6.8%, did not change in November, which was in line with our expectations, since the service package that caused the large decrease is still available under the previous conditions. The price of holiday services decreased by 0.3%.

Outlook

The base effect also contributed to the increase in the November figure, as prices stagnated in a monthly comparison in November last year. This time, the year-on-year inflation rate remained within the central bank’s tolerance band, but due to base effects, we expect the annual price increase rate to be 4.3% in December this year. Our average inflation expectation for next year is 3.8%, which is also due to the recent weakening of the forint. Weak GDP is cooling inflation, but at the same time, the EURHUF exchange rate, which has risen significantly above 400, poses increasingly pronounced inflation risks (the average exchange rate calculated since the beginning of the year is still only around 394), just as the minimum wage increase is also having an inflationary effect. However, due to the worse-than-expected GDP growth, the cyclical position of the economy may have become even more disinflationary, and therefore we do not expect inflation to exceed 4% on an annual average next year (it may rise slightly above this level in some months).

Prepared by:

Márta Balog-Béki, Senior Capital Market Analyst (Balog-Beki.Marta@mbhbank.hu)

Zoltán Árokszállasi, Director of the Analysis Center (Arokszallasi.Zoltan@mbhbank.hu)