Turkey | Consumer inflation at 14% in November

Summary

Consumer prices increased by 2.30% in November, leading the annual inflation to reach 14.03% up from 11.9% in October. Cost push factors continued to weigh on the upside as domestic producer prices rose by 4% mom. After today's spike, we expect inflation to end 2020 at near 14% and maintain 2021 year-end forecast at 11%.

Key points

• Key points:
• One of the main factors behind today’s upside surprise was the seasonally high food prices which rose by 4.4%, leading annual food inflation rose to 21.7% up from 16.7% in October.
• Annual core C inflation rose to 13.3% from 11.5% on the pending exchange rate pass-thru and second round prices effects.
• Cost push factors also fueled the upside pressures on consumer inflation as domestic producer prices (4% mom) jumped up by 23.1% in annual terms.
• We expect the exchange rate pass-thru to calm down in the next months which could also be supported by the expected deceleration in domestic demand; though cost push pressures, inertia on deteriorated expectations and unfavorable base effects till April 2021 will keep the headline increasing to around 15% in April 2021 before a gradual disinflation path thereafter.
• After today’s spike, we now forecast consumer inflation to end the year at near 14% and maintain our 2021 year-end forecast at 11%.

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