Turkey | Annual CPI got closer to 80%

Consumer prices increased by 4.95% in June, slightly lower than market consensus (5.7%) and our expectation (5.5%), which resulted in an annual figure of 78.6%. We expect consumer inflation to accelerate above 90% in the coming months led by loose economic policies and significantly deteriorating inflation expectations.

Key points

• Key points:
• Food prices continued to rise in June (1.4% mom) and led the annual figure to reach a new record level of 94.3%.
• Energy prices continued to accelerate by 16.2% mom, resulting in an annual energy inflation of 151.3% on the back of utility and fuel price hikes during the month.
• Core prices slowed down compared to previous months but still remained high both in monthly (3.3% mom) and annual terms (57.26%), led by stronger cost push factors, ongoing robust domestic demand and currency depreciation.
• Despite domestic producer prices gearing down in monthly terms (6.8%), the annual PPI inflation reached 138.3%.
• Wage adjustments remain crucial so it is obvious that inflationary pressures will likely strengthen more until a clear policy reaction is taken.

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