Türkiye | August CPI surprised to the downside

Summary

Consumer prices rose by 1.46% in August, once again below both market consensus and our expectation (2%), which led to an annual inflation of 80.2%. We forecast consumer inflation to be 70% at the end of the year and 33% at the end of 2023, with risks remaining on the upside.

Key points

• Key points:
• Food prices continued to rise in August by 0.5% mom, leading to an annual figure of 89.3% down from 94.5%.
• Energy prices decreased by 2.7% mom on the back of downward adjustments in fuel prices. As a result, annual energy inflation edged down to 121.7% from 129.3% the month before but still remained historically high.
• The increase in core prices (3.1% mom), led to an annual inflation of 66.1% up from 61.7% in July, driven by stronger cost push factors, robust domestic demand and ongoing currency depreciation.
• Despite the deceleration in domestic producer prices in monthly terms, annual PPI inflation of 143.7% continued to signal strong cost push factors on CPI.
• High global inflation and loose economic policies to support domestic economic activity, ongoing exchange rate depreciation and second round effects, risks to the inflation outlook remain on the upside.

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