Turkey: August inflation as expected - ING

Muhammet Mercan, Chief Economist at ING, notes that Turkey’s consumer prices that have already reached the highest since the inception of the current series were up by 2.3% in August, almost aligned with the median market consensus.

Key Quotes

“Annual inflation jumped to 17.9% from 15.39% a month ago, contributed by the continuing deterioration in goods inflation, especially energy and core goods gave the ongoing impact of exchange rate pass-through and administrative adjustment and continuing rise in sticky services inflation with across the board pressure in sub-items including rent.”

“Annual core inflation also soared this month from 15.1% in July to 17.2% in August, while the rise was broad-based, with all major categories registering increases as FX pass-through continues to feed into prices.”

“The Domestic Producer Price Index (D-PPI), on the other hand, was up by 6.6% last month, the highest monthly increase since 2003, showing persisting and strengthening producer-price-driven cost pressures.”

“Annual inflation jumped to 32.1% from 25% a month ago. The PPI that has been on an uptrend since February show current widespread pricing pressures in almost all groups.”

“Overall, August data shows the inflation outlook remains poor with further worsening in the price dynamics driven by cost factors, while the evolution of the exchange rate and food prices will likely determine the inflation evolution given ongoing slowdown in demand pressures.”