Turkey | Consumer inflation rose up to 19.25%

Summary

Consumer prices increased by 1.12% monthly and 19.25% annually once again above expectations on the back of a higher than expected food inflation. We expect consumer inflation to stay close to 19% till November and end the year at close to 17%, with the help of positive base effects.

Key points

• Key points:
• Food inflation surprised again on the upside stemming from fresh fruit and vegetable prices (in contrast to its negative seasonal average) besides high processed food inflation (10.1% and 2.2% mom respectively, annual food inflation reached: 29.8%).
• Core inflation remained relatively weaker (0.38% mom and 16.76% yoy) on the back of the change in SCT ranges in auto prices besides supportive clothing and durable goods prices.
• Services prices inflation remained high due to the reopening in the economy, better tourism season and still strong domestic demand.
• Cost push factors strengthened further as producer prices increased by 2.8% mom, bringing the annual figure up to 45.5% and the gap between CPI and PPI remains at record levels.
• Looking ahead, strong cost push factors, high inertia, still robust demand and ongoing global supply bottleneck on pandemic would continue to weigh inflation on the upside.

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