Actual (Jan): 2.1 % m/m, 5.5 % y/y Consensus: 5.0 % y/y Previous (Dec): 0.2 % m/m, 4.1 % y/y The inflation accelerated more than expected in January. The consumer prices were inflated by the VAT hike, coming into force at the beginning of the year. The most significant contribution to inflation came from food, services and fuels, where the VAT influence combined with high crude oil prices and the weak forint. Also the contribution of alcohol and tobacco was significant, in part due to an excise tax hike. The core inflation is still on the rise and reached 4.9 pct in January. It means the central bank may worry about a spillover from the non-core items. However, the risk is quite low as the consumer demand remains weak and should help to anchor inflationary expectations. The central bank seems to be confident in the IMF deal that should bring risk premia further down. They have already improved; the forint has firmed since the beginning of the year. Until the deal is achieved the bank will likely wait and keep its policy stable.