Current Oil prices act pro-inflationary

Erste Bank Research Team Erste Bank

On the radar

Producer prices in Slovakia declined by -1.3% y/y in January, while in Croatia by -1.2% y/y.
Today, Hungary will release producer prices (8.30 AM CET) and Slovenia (10.30 AM CET).
Retail sales in Slovenia declined by -1.5% y/y in January, while today February’s flash inflation will be published.
At 11 AM CET, Croatia will release 4Q25 GDP data including structure, alongside retail sales and industrial output growth for January.

Economic developments

Oil price development since the beginning of the year has become inflationary. Price of crude oil (Brent) increased from around 60 USD per barrel in January to slightly above 70 USD per barrel most recently. That represents roughly 15% y/y increase since the beginning of the year. Further, oil prices have shifted from negative year on year growth in early 2026 to clearly positive rates by mid-2026 (conditional on fixing the price at recent levels that are close to 70 USD per barrel) as shown by the green bars. If price of oil remains close to 70 USD per barrel, we would expect moderate but non negligible impact on headline inflation across the region as oil price contribution to inflation—deeply negative for much of 2025—will flip back into positive territory in 2026, removing an important disinflationary driver. Overall, the recent increase in Brent prices represents a small but meaningful upside risk to inflation trajectories for 2026.

Market movements

Hungarian forint strengthened against the euro over last week in the aftermath of the central bank’s decision to lower the key policy rate. EURCZK and EURPLN sustain the levels from the beginning of the week. Long-term yields have declined across the region and the most n Hungary and Croatia. Romania sold RON 500 million of government papers maturing in 2034. The average accepted yield fell to 6.21% from 6.67% of the same issue held last month. Poland’s Fiscal Council views the SAFE loan as a financially beneficial instrument for Poland but criticizes that moving more expenditures and debt outside the state budget worsens the transparency of public finances.

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Erste Bank Research Team

Erste Bank

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