Official data released by Hungarian Central Statistical Office showed on Friday that Hungarian CPI data for June continued to depict headline deflation and low core inflation. Hungary's headline CPI was up 0.2 percent m/m, in line with expectations, and the year-on-year rate remained unchanged from May's -0.2 percent.
Core inflation moderated from 1.3 percent y/y to 1.2 percent, and MNB's estimate of core inflation, excluding tax changes, worked out to unchanged 1.1 percent y/y. The price of fuel fell significantly over the preceding 12 months, in contrast, the price of alcoholic beverages and tobacco rose sharply, as did the costs of services, KSH reported.
The June data again show that inflationary pressure in the Hungarian economy remains low, as evidenced by falling core inflation. Unless these trends turn around sometime soon, it is difficult to see CPI inflation averaging MNB's forecast of 0.5percent this year.
“We maintain our forecast that MNB will cut its policy rate again from 0.9percent to 0.5percent next year; we see EUR-HUF at around 320.00 by the end of 2016,” said Commerzbank in a report.
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