Key events in EMEA and Latam next week

Next week's focus will be on the CPI data. We expect headline inflation to increase slightly, while both core inflation and tax-adjusted core inflation are likely to jump further due to energy price base effects. Despite the (expected) 4.0% CPI figure, we're not expecting any reaction from the National Bank of Hungary.

Elsewhere, April activity data should show that the positive momentum continues, with both retail and industry expected to accelerate somewhat. The May year-to-date budget deficit might surprise on the upside again, proving that there are sufficient resources behind the new fiscal measures.

CPI should remain stable in May at 2.2% YoY as the rise in food prices is likely to be offset by lower gasoline costs and core inflation - where we forecast a drop from 1.7% to 1.6% YoY. Last month's increase relied on a seasonal distortion in the price of plane tickets, which added +0.25 percentage points to the headline figure, but this move should (at least) partially retract in May. However, upward pressure is expected from communication prices, as the biggest mobile operator increased basic fees.

The MPC meeting should be a non-event. We expect discussion to be focused on the 2020 CPI outlook. The Ministry of Energy recently announced that the freezing of electrical energy prices for enterprises will be abandoned in the second half of the year (effectively from July 2019). There is also no information about energy tariffs for households in 2020 - current comments suggest only that, in 2019, the lower prices will be sustained at the present lower level. The former decision should result in the arrival of some cost pressures next year.

However, we do not expect a material change in the MPC communication. Our CPI forecast for 2020 (2.8% YoY) remains close to the National Bank of Poland's March projections (2.7%). Furthermore, central banks assumptions regarding energy prices are rather conservative.