Turkey | Annual CPI climbed up to 48.7% in January

Summary

Consumer prices increased by 11.1% in January parallel to expectations and resulted in an annual inflation of 48.7% up from 36.1% the month before. We expect consumer inflation to remain around 55% in 2Q and 3Q before falling down to 35% at the end of the year, helped by the favorable base impact in December.

Key points

• Key points:
• Food inflation had a new record level (56.8% y/y), while energy prices accelerated further (76.4% y/y) on the back of both fuel and utility price hikes.
• Core prices remained high (39.5% y/y), led by a broad-based worsening including the most sticky services prices.
• Cost push factors increased further with the 93.5% y/y PPI.
• Despite some recent stabilization in the currency, strong cost-push factors, high food inflation and pressure from imported prices reinforce uncertainty on the inflation outlook due to potentially high second round effects.

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