CEE: Energy pressures offset food disinflation

Erste Bank Research Team Erste Bank

On the radar

Inflation rate in Hungary landed at 1.3% y/y.
Trade deficit in Slovakia was at EUR -0.8 million, while in Croatia at EUR -1988 million.
Share of unemployed in Czechia increased slightly in July to 5.1%.
Today, Poland’s central bank announces interest rate decision.
Trade balance in July is due in Romania, and industrial output in Slovakia.

Economic developments

In Hungary, August inflation edged up to 1.3% y/y (0.2% m/m) from 1.2% in July. We are still waiting to see price development in August in Romania and Serbia (due Friday, September 11). In the meantime, we look at the drivers of inflation across the region. In particular, we look at energy and food prices development as in many CEE countries these two categories were of particular importance. The clearest inflationary impulse currently comes from energy and fuel, reflecting the consequences of the Middle East conflict as well as changes in government support schemes. This is particularly visible in Poland, where fuel prices jumped 5.2% m/m in August. %. In Czechia and Hungary, August's modest acceleration also reflected higher fuel prices. On the other hand, we observe the decline in food prices in Czechia, Poland, Slovakia and Hungary. In Czechia, falling food prices are the main reason headline inflation remained at just 1.9% in August. In Poland, food prices fell 0.7% m/m, while in Hungary by 0.2% m/m.

Market movements

Today, Poland’s central bank announces interest rate decision, and we expect no change. The following day the press conference of Governor Glapinski will follow. We believe that given elevated level of commodity prices and suggestions about interest rate cuts are off the table. EURPLN holds close to 4.31, while EURHUF is at 363. In Hungary, August inflation at 1.3% y/y leaves some space for central bank action in September, on the other hand external developments may lower appetite for it. It seems that the inflation target will not change at the September interest rate decision yet. Romania will increase efforts to install a new and fully operational government ahead of the upcoming ratings’ reviews (S&P is scheduled for October). Political instability seems to be a key factor for Romania’s ability to deliver on fiscal consolidation and credibility to stabilize public finance in medium term. Finally in Serbia, President Vučić said snap parliamentary elections will be held on 25 October 2026, with the decree dissolving the National Assembly and the formal call to be announced on today (September 9).

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Erste Bank Research Team

Erste Bank

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