Türkiye | Uncertainty on inflation figures

Summary

Consumer prices rose by 3.08% in September, below both market consensus (3.15%) and our expectation (3.7%), which led to an annual inflation of 83.5%. We expect consumer inflation to be 70% at the end of the year as base effects would start a disinflation path.

Key points

• Key points:
• Domestic producer price inflation jumped by 4.8% mom (151.5% yoy) contributing to an acceleration in cost push factors.
• Though, core prices inflation was much weaker than expected (2.7% mom), mainly due to the limited increase in goods prices excluding food and energy (1.4% mom). Yet, annual core C inflation still rose to 68.1%.
• Food price inflation stayed strong by 2% mom, leading to an annual figure of 93%.
• Energy prices climbed up by 7.4% mom on the back of the latest price hikes for both households (20%) and industry (50%) in electricity and natural gas by the authorities and 40% increase in water prices in Istanbul.
• High inertia, worsened inflation expectations, loose economic policies, upside risks on currency and regulatory barriers will continue to keep upside risks on the inflation outlook.

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