Turkish August CPI inflation comes in at 0.4% m/m, above expectations

By bne IntelliNews September 3, 2015

Consumer prices rose by 0.4% m/m in August (Anadolu Agency survey: 0.16% m/m, Reuters survey: 0.11% m/m), bringing the annual inflation rate to 7.14% from 6.81% in July, data of the statistics office showed on September 3.

Food prices increased by 1.31% m/m adding 0.33 percentage points to monthly headline inflation, but clothing prices fell by 4.32% m/m shaving off 0.33 percentage points. The increase in food prices was 0.28% m/m in July. Transport costs declined 0.38% m/m, education increased 1.41% adding 0.44 percentage points, hotel & cafe prices rose 2.05% m/m contributing another 0.15 percentage points to the headline inflation.

The core inflation, measured by the central bank’s favourite I-index (which excludes the prices of food, alcoholic beverages, tobacco products and gold), exhibited a 0.24% m/m increase in August after rising 0.11% m/m in the previous month. Consequently, the annual core inflation accelerated to 7.66% from 7.31%.

The central bank has warned that exchange rate movements delay the improvement in the core indicators and the latest data showed the adverse effects of the depreciation of the local currency on prices. TRY is expected to remain under pressure given the ongoing political uncertainty and heightened security concerns as well as geopolitical risks. In a recent report Morgan Stanley argued that currency depreciation is likely to damage the inflation outlook in the last quarter of the year. In line with this, the investment bank increased its year-end CPI expectation to 8.0% from 7.6%.

Data of TUIK also showed that domestic producer prices, which fell 0.32% m/m in July, increased 0.98% m/m in August. The annual rise in domestic prices accelerated to 6.21% from 5.62%.

August CPI by Main Expenditure Groups (%)
  Weights m/m y/y
Headline 100 0.40 7.14
Food and non-alcoholic beverages 24.25 1.31 9.71
Alcoholic beverages and tobacco 4.82 0.36 4.13
Clothing and footwear 7.38 -4.32 4.72
Housing, utilities 15.79 0.35 8.19
Furnishings, household equipment 7.78 0.23 8.60
Health 2.57 0.37 6.72
Transportation 15.38 -0.38 0.60
Communications 4.38 0.97 2.03
Recreation and culture 3.54 1.96 9.19
Education 2.53 1.41 6.84
Hotels, cafes and restaurants 6.98 2.05 14.26
Miscellaneous goods and services 4.60 1.21 9.91
Source: tuik      

Related Articles

Erdogan says he plans talks with lenders on cutting Turkish interest rates

Turkey's President Recep Tayyip Erdogan said on October 13 that he plans to hold talks with both public and private lenders on how to lower interest rates. He did not say, however, when those ... more

Turkey's Erdogan turns fire on US ambassador in diplomatic spat over arrest

Turkish President Recep Tayyip Erdogan has turned his fire on the US ambassador to Turkey for the ... more

Turkey-based Eurasian development bank ETDB signs memo to boost return to Iran

The Central Bank of Iran (CBI) and the Turkey-based ECO Trade and Development Bank (ETDB) have signed a memorandum on strengthening bilateral ties, the CBI said on October 10. ETDB is a Eurasian ... more

Dismiss