Hungarian consumer price index drop from 0.3% Y/Y in February to -0.2% Y/Y in March has caused a huge surprise for the market, FXStreet reported. It is expected that the inflation will return to negative territory, but that it will be two months later. Core inflation moderated from 1.5% Y/Y in February to 1.3% Y/Y in March. The main reasons behind the fall are 1) base effect as a year before the fuel prices went up 2) food price decrease because of the VAT cut of some meat products and the oversupply of milk 3) tradable goods and market services inflation started to moderate. Looking ahead, without a sudden increase in oil prices, inflation is expected to fall further in the coming months below -0.5% and it is likely to remain in negative territory till August. We still see consumer price index close to 2% at the end of the year, but it calculates with an oil price increase to around $45/barrel in the last quarter in 2016. The average inflation may be around 0.3% Y/Y in 2016.
