Key events in EMEA next week

Next week is going to bring us a very busy economic calendar in Hungary. Regarding economic activity, we see the February industry and retail sales performances to be strong based on big data and government transfers. Despite the sound growth in industry, trade balance deterioration will continue on the worsening terms of trade due to rising prices in the commodity complex. However, these data are referring to the past and hardly reflect the full economic impact of the Ukraine war. What will however reflect that is the March inflation print. We see headline inflation rising further both on a monthly and yearly basis. Despite anti-inflationary measures, the year-on-year headline figure could move above 9%, alongside core inflation. In our view, the core reading could surpass the headline reading for the first time since early 2021.

Despite there being some impact from VAT cuts on food products introduced in mid-February, annual inflation will maintain its uptrend to 60.4% (5.0% on a monthly basis) in March from 54.4% a month ago, given significant upside pressures on commodity prices – particularly in energy and agricultural commodities, in addition to the impact of FX pass-through, deteriorating expectations, and pricing behaviour.