Turkey | CPI reached above 61% in March

Summary

Consumer prices increased by 5.5% in March, parallel to expectations and resulted in an annual inflation of 61.1% up from 54.4% the month before. Looking ahead, we expect consumer inflation to hover near 70% in 2Q and 3Q and decline to 50% at the end of the year, led by the favorable base effects.

Key points

• Key points:
• Food prices continued to rise (a new record level in annual figure since 2003, 71.6%). The recent price hikes in administrative prices will keep the upward bias on food inflation.
• Energy prices kept accelerating (11% m/m) and increased by 102% y/y, following the Russia’s invasion in Ukraine.
• Core prices gained momentum, fueled by the renewed depreciation pressure on the exchange rate.
• Cost push factors continued to deepen as domestic producer prices (PPI) rose by 9.2% m/m and annual PPI reached a new record level of 115%.
• Continuing exchange rate pass thru and inertia, fueled by accelerating cost push factors, and worsening inflation expectations keep upside risks on the inflation outlook.

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