October Inflation Numbers

Well inflation in October was just a touch higher than expected:

Hungary's consumer prices climbed 6.3% year on year in October, up from a 5.9% increase in September and overshooting analysts' consensus estimate of 6.2% in a Portfolio.hu poll conducted on Monday.

Even though this number was only very slightly above forecast it is hardly good news, since it will put pressure on the central bank to raise rates. The only saving grace in all this is that the ECB may come under increasing pressure not to raise rates further as economic growth and investor confidence in Germany deteriorate and this possibility, if confirmed, will put sort of floor under the Forint. However such a move would have to come over the protesting bodies of Trichet and many others at the ECB who keep insisting that inflation is still the primary threat. As I keep saying on my own blog, someone somewhere is going to have a hell of a lot of humble pie to eat at some point.

But even this possibity is very much a double edged sword, since slowing growth across the eurozone won't help Hungary to raise exports, which is something she badly needs to do. This is the meaning of being between a rock and a hard place.