Turkey | Annual CPI comes down to 11.9% in March

Summary

Consumer prices increased by 0.57% in March, higher than both the consensus 0.5% and BBVA Research 0.23%. Annual inflation declined to 11.86% from 12.37% in February, led by favorable base effects. Looking ahead, we expect the headline inflation to experience one digit levels as early as May and end the year at near 7.5%.

Key points

• Key points:
• The deviation of our forecast mainly stemmed from the food prices, which surprised us on the upside with seasonally higher unprocessed food inflation.
• Core inflation carries a stronger than expected exchange rate pass-thru and reflects some resistance to lower demand, which could be mostly felt starting from April.
• The suppressed energy prices weigh on the downside for inflation as expected.
• Depending on the current depreciation pressures over the currency, base effects will remain favorable till August.

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