Key events in EMEA next week

In Hungary, next week is about economic activity data as the Statistical Office is releasing the December figures of retail sales and industrial production. The December manufacturing Purchasing Managers' Index (PMI) provided a significant upside shock and despite the year-end holiday season, we see an improving performance in industry. This will be complemented by rising retail sales. Despite month-on-month growth being moderate, in our view, last year’s low base will help to nudge the yearly base reading higher. Eventually, with these positive outcomes in December, the 4Q21 GDP growth could provide a nice upside surprise.

In January, significant adjustments in administrative prices including electricity, natural gas, tobacco and alcohol, and gasoline, as well as continuing pass-through from recent large currency volatility already point to another sharp increase in the Consumer Price Index (CPI). Accordingly, we expect annual inflation to rise further up to 45.2% (8.5% on a monthly basis) from 36.1% in December.