Turkish consumer prices fall 0.5% m/m in June

By bne IntelliNews July 3, 2015

Consumer prices fell 0.51% m/m in June as food prices declined, data of the statistics office TUIK showed on July 3.

The markets had expected headline CPI inflation to decline by 0.25% m/m.

The annual inflation rate, consequently, slowed to 7.2% in June from 8.09% in May.

Volatile food prices declined 2.79% m/m in the month, shaving off 0.69 percentage points from headline inflation while clothing prices fell 1.32% m/m, subtracting a further 0.1 percentage points.

Amid the increase in product supply, correction in food prices would be more pronounced in June, the central bank had predicted last week. But, the also warned that although a partial correction in food prices is expected to ease inflation in the short term, the recent exchange rate movements have delayed the improvement in core inflation.

The core inflation, measured by the central bank’s favourite I-index, rose 0.33% m/m in June, bringing the annual increase in the I-index to 7.51%.

According to data from TUIK, recreation & culture prices increased 2.64% m/m, adding 0.1 percentage points to headline inflation while communication prices rose 0.04% m/m and transportation costs fell 0.01% m/m.

The central bank recently warned that the inflation outlook has yet to display the desired improvement. In April, the bank raised its inflation forecast for 2015 to 6.8% from a previous 5.5%, citing a weak lira and high oil prices. The bank also lifted its 2016 inflation forecast to 5.5% from a previous 5%.

Domestic producer prices rose 0.25% m/m in June, bringing the annual rise in producer prices to 6.73% from 6.52% in May, TUIK also said.

June CPI by Main Expenditure Groups (%)
  Weights m/m y/y
Headline 100 -0.51 7.20
Food and non-alcoholic beverages 24.25 -2.79 9.28
Alcoholic beverages and tobacco 4.82 -0.01 4.13
Clothing and footwear 7.38 -1.32 5.92
Housing, utilities 15.79 0.30 8.39
Furnishings, household equipment 7.78 -0.09 7.23
Health 2.57 0.53 6.48
Transportation 15.38 -0.01 1.23
Communications 4.38 0.04 3.13
Recreation and culture 3.54 2.64 11.13
Education 2.53 0.70 6.24
Hotels, cafes and restaurants 6.98 1.09 13.62
Miscellaneous goods and services 4.60 0.79 9.89
Source: tuik      

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