March retail gross sales level to robust consumption in Hungary

Subsequent Report will probably be revealed on Monday ninth of Might 2016

Hungarian retail gross sales rose by 5.5% Y/Y in March barely down from the 6.7% Y/Y in February (in accordance with calendar adjusted knowledge – the quantity progress was four.2% y/y). The primary driver of the expansion was the non-food merchandise, which have been up by 7.6% Y/Y. The meals gross sales have been up by 1.9% Y/Y, whereas the gasoline consumption rose by 5% Y/Y. The primary quarter retail gross sales figures confirms our view that the households consumption fuelled by the web actual wage progress boosts the financial system and it might stay one of many foremost elements of GDP progress within the following quarters as nicely, as a result of the relative degree of the households consumption continues to be nicely under the equilibrium degree in comparison with the actual revenue.

The primary query is that the fairly robust home consumption pushes up the inflation within the following months or not. The headline determine is more likely to stay in adverse territory until August – the underside could be in July round -Zero.eight% Y/Y – primarily as a consequence of base impact, VAT minimize and low power costs. The April CPI may stay across the March degree of -Zero.2% Y/Y, so we’ve to give attention to tradable merchandise and market providers inflation and on the core inflation adjusted by the tax modifications to have a clearer image about inflationary orbit.

It will be important that the NBH modified its stance of communication within the final one week they usually attempt to cool the speed minimize expectations. The comparatively robust consumption helps the marginally extra hawkish angle of the NBH, so we keep our view that the Financial Council might average the bottom price by ‘simply’ 15bp in Might, which is perhaps adopted by most another reduce in June.

The yield curve was pushed up considerably within the final days and in addition steepened barely, the lengthy and of the curve moved up by round 40bp whereas the short-end moved solely by 20-30bp. This response of the market may be due to the top of the self-financing program (the banks excessive demand for bonds moderates), the loosening fiscal coverage in 2017 and the attainable failing score improve of Hungarian debt. We nonetheless see quite sellers available on the market, however we expect that between Three.four% and three.6% in case of 10-year bond – it was the height in December and January) consumers might return available on the market. Additionally in case of three and 5 years paper we see roughly 20bp upside potentials, which may be adopted with some vary buying and selling within the following weeks.

Currencies % chng
EUR/CZK 27.02 Zero.Zero
EUR/HUF 311.9 Zero.Three
EUR/PLN four.39 Zero.Three
EUR/USD 1.15 -Zero.Three
EUR/CHF 1.10 -Zero.four
FRA 3×6 % bps chng
CZK Zero.26 -2
HUF Zero.90 Three
PLN 1.64 1
EUR -Zero.26 Zero
GB % bps chng
Czech Rep. 10Y Zero.46 -Three
Hungary 10Y Three.39 Zero
Poland 10Y Three.10 2
Slovakia 10Y Zero.85 -1
CDS 5Y % bps chng
Czech Rep. 41 Zero
Hungary 146 2
Poland 85 Zero
Slovakia 42 Zero