Turkey’s annual consumer price inflation climbed to a 11-month high of 9.22% in January as key items such as food and transport costs posted significant increases in the month, data from national statistics office TUIK showed on February 3.
The annual inflation rate, which stood at 9.58% in January last year, remained above 6% throughout 2016 when the country’s struggling currency lost 17% of its value, feeding into consumer prices.
Monthly inflation rose by a sharp 2.64%, exceeding the 1.78% m/m increase predicted by the market consensus of a Reuters poll.
The January data makes up the first inflation release since the TUIK last month reshuffled the CPI inflation basket. The changes cut the weightings of non-alcoholic beverages, clothing, housing and food, while raising the weightings of transportation, alcoholic beverages and tobacco.
Food prices jumped 6.37% m/m, adding 1.39 percentage points to the headline inflation figure, while the prices of alcoholic beverages and tobacco produces increased 2.36% during the month, contributing another 0.14pp to the headline number. Reflecting the impact of rising energy prices and the currency's weakness, transport costs were up 3.24% m/m, adding 0.53pp. Housing prices also rose by 1.82% m/m.
The 6.99% decline in clothing prices, due to seasonal discounts, shed 0.53pp, keeping a further rise in headline inflation in check.
The increase in domestic producer prices accelerated to 13.69% y/y last month from 9.94% in December. Monthly producer price inflation came in at 3.98% in January versus 2.98% in the previous month.
The core inflation outlook was not promising either. One of the main core inflation indicators, the so-called C-index, increased by 0.57% m/m, bringing the annual rise for this item to 7.74% in January from 7.48% in December 2016.
Earlier this month, the country’s central bank lifted its end-year inflation forecast for 2017 to 8%, citing the currency's decline and volatile food prices.
The bank upgraded its end-year food inflation forecast to 9% from the previous estimate of 7%.
The lira weakened 0.2% after the inflation report, but it gained afterwards to trade at 3.7483 per dollar as of 10:30 local time.
|Turkey's CPI Inflation (y/y)|
|Food and non-alcoholic beverages||23.68||10.87||9.69||6.19||4.16||5.20||3.55||5.65||21.77||7.77|
|Alcoholic beverages and tobacco||4.98||5.68||19.36||23.03||22.61||22.61||22.61||31.59||5.87||22.90|
|Clothing and footwear||7.43||8.99||8.26||7.84||7.03||6.07||4.59||3.98||7.33||3.66|
|Furnishings, household equipment||8.02||10.95||8.21||8.25||7.13||6.28||5.46||6.24||7.72||6.16|
|Recreation and culture||3.81||11.56||7.31||5.63||3.97||2.42||4.26||5.93||3.62||6.23|
|Hotels, cafes and restaurants||7.47||13.23||9.96||8.63||8.31||8.34||8.50||8.62||8.05||8.58|
|Miscellaneous goods and services||4.73||11.00||12.68||11.84||10.03||9.34||10.92||11.08||5.04||12.74|