Citi expects headline inflation in Czechia to rise to 1.9% year-over-year in August, up from 1.7% in July, with the bank attributing the uptick mainly to an acceleration in fuel prices. At the same time, core inflation is forecast to moderate a touch, slipping to 2.9% from 3.0% as measured in the previous month.
The forecast notes that services inflation remains resilient, supported by robust wage growth and sustained domestic demand, factors that continue to underpin price pressures in that part of the consumer basket.
On the production side, Citi projects calendar-adjusted industrial output in Czechia to slow to 3.2% year-over-year in July, down from 4.0% in June. The bank highlights the typical pattern of planned factory shutdowns in July - particularly within the automotive sector and related engineering industries - as a usual constraint on monthly production readings.
Turning to Hungary, Citi estimates consumer price inflation rose to 1.4% year-over-year in August from 1.2% in July. Weekly pump-level data cited by the bank indicate roughly a 5.5% month-over-month increase in fuel prices, while food prices are expected to have fallen by 0.6% over the same period. Separately, Hungary's industrial output is forecast to be up 3% compared with the corresponding period of 2025.
In Poland, Citi expects the Monetary Policy Council to keep the reference interest rate unchanged at 3.75%. Although the National Bank governor signaled a possibility of future rate cuts in July, Citi says that recent inflation developments together with a sharp rise in long-term yields are likely to prompt a more cautious policy message this time around.
Elsewhere, Citi forecasts that South Africa's GDP contracted by around 0.3% quarter-over-quarter on a seasonally adjusted basis in the second quarter. The report identifies a 4.2% quarter-over-quarter seasonally adjusted decline in wholesale trade. Mining and electricity production are estimated to have fallen by 2.8% and 2.5% respectively, while manufacturing production is shown contracting by 1.6% in the same quarter.
Key context and takeaways
- Headline inflation in Czechia is expected to tick up due mainly to fuel price increases, while core inflation is forecast to ease slightly.
- Industrial production in Czechia is projected to slow in July, with the automotive and engineering sectors cited as typical sources of seasonal shutdowns that weigh on output.
- Regional data show mixed momentum: Hungary's inflation and industrial output are forecast to rise modestly, Poland's central bank is likely to maintain rates, and South Africa is estimated to have seen a quarter of GDP contraction with notable declines across wholesale trade, mining, electricity and manufacturing.
Sectors likely affected
- Energy and transport - through the influence of rising fuel prices on headline inflation.
- Manufacturing and automotive - via seasonal shutdowns and measured declines in production.
- Wholesale and mining - notably in South Africa where activity showed quarter-on-quarter drops.