People’s Word Deteriorating inflation outlook


Flood Inflation was only 2.7 percent in January, but all analysts expect prices to accelerate.

As expected, annual consumer price inflation remained at 2.7 percent in January. However, core inflation, which showed deeper trends, rose from 4 percent to 4.2 percent, largely due to rising prices for tobacco products, Gergely Suppan said. According to Takarékbank’s chief analyst, the rate of increase may rise above 3 percent in the coming months. In April, due to the low base of fuel prices a year ago, the rate of increase may jump to close to 5 percent, but in the summer months it is expected to fall below four percent. Thus, the analyst expects an average inflation of 3.7 percent this year after 3.3 percent last year. At the beginning of the year, inflation may be moderated by the fall in pork prices from last year due to the swine fever and the fall in pork prices. On the other hand, a significantly weaker forint may strengthen inflation compared to the beginning of last year, which can already be seen in the case of durable consumer goods, but the rise in the price of new cars is also influenced by the significantly higher technical content. However, price increases for rents and other market services have slowed significantly. Inflation will also be boosted by further increases in excise duties on tobacco products, Suppan said. Although based on this, it seems that there is no significant inflationary pressure in the economy, the 0.9 percent price increase measured on a monthly basis is outstanding, wrote Péter Virovácz, an analyst at ING Bank. All in all, the January 2021 inflation data has not yet substantially changed this year’s inflation outlook. The main question remains what will happen to prices after the economy reopens. We can get an answer to this in the spring at the earliest. In the meantime, inflation is expected to pick up due to the low base. According to our current calculations, the indicator may jump to 4 percent in May, the analyst of ING Bank said. According to the inflation outlook, higher-than-January inflation data can be expected for the rest of the year. A price index of 3 percent is expected already in February, after which further acceleration will come: it will be above 4 percent in April and May, said Dávid Németh, an analyst at K&H Bank. On an annual average, Dávid Németh expects inflation at 3.6 percent, and in December he expects a price increase of around 4 percent. In one year, food prices rose 3.9 percent, a substantial slowdown from above 8 percent in the spring months. Prices for Paris and sausages rose 6.6 percent, and prices for salami and ham rose 4.8 percent. Flour rose by 7.1 per cent, bread by 6 per cent, sugar by 11.7 per cent, fruit by 17.3 per cent and seasonally priced food by 8 per cent. The prices of alcoholic beverages and tobacco products increased by an average of 9.9 per cent, of which tobacco products by 16.5 per cent, which is a significant jump compared to the previous months. Clothing became cheaper due to the suspension of parking fees, the prices of tolls, car rental and parking decreased by 21.6 percent. Due to the collapse of the rental market, rental prices fell by 0.8 percent. At the same time, the price of home repairs and maintenance is still fast, at 10.7 percent.

The consumer basket has transformed, this is pushing the pointer down

Implemented by the statistical office within the consumer basket, standard January overweight as well. The usual rule so far has not changed, ie it is still the two years earlier, so in 2021 the consumption structure of 2019 was used as a basis. To some surprise, this meant that the 27.3 percent weight of services changed to 25.9 percent in the previous year. In the case of a 5 percent increase in service prices, which can easily occur after reopening due to excess demand, it means almost 0.1 percentage points lower inflation, only due to the change in weight, Péter Virovácz said.


Source: Népszava by nepszava.hu.

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