Underlying inflation measures mostly pick up in Hungary

The underlying inflation measures of the National Bank of Hungary (NBH) showed mostly higher inflation in March, according to the NBH data. Demand-sensitive inflation slowed down slightly to 1.5% y/y but tax-adjusted core inflation and sticky-price inflation accelerated during the month. Demand-sensitive inflation has stayed flat in the past several months while the other two underlying inflation measures have shown an upward trend, especially in the case of tax-adjusted core inflation. Tax-adjusted core inflation was the highest since Jan 2013, the data showed.

The slower headline inflation print in March mainly reflected moderating fuel prices due to base effects, the NBH said. Demand-sensitive and sticky-price inflation were broadly unchanged from the previous month and remained in their usual range of fluctuations, it added. The NBH did not comment specifically on the noticeable rise in tax-adjusted core inflation but said that both demand-sensitive products and cost-sensitive items like food and energy had an upward effect on prices. Inflation in tradable goods remained at moderate levels in March and there was no significant changes in durables and non-durables prices, the NBH commented. Services inflation was also consistent with the seasonal pattern for this time of year, it noted. Prices of alcohol and tobacco fell despite the tobacco excise tax hike, it said.

Processed food prices were modestly up m/m in seasonally-adjusted terms in March. This was mainly due to bread prices, which we think might reflect market reports for the impact of the labour shortage problem on the sector. Unprocessed food prices fell slightly m/m in adjusted terms with a decline in vegetable prices, the NBH noted. Regulated prices were largely unchanged from the previous month, it added.

Households’ inflation expectations have remained broadly unchanged in recent months and were still at moderate levels, the NBH said.

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