Turkey | Core inflation surprisingly rose up to 17%

Consumer prices increased by 1.25% in September resulting in an annual inflation of 19.58%, up from 19.25%. We expect consumer inflation to increase further in October before declining to near 17% at the end of the year, with the positive base effects, where risks are clearly on the upside.

Key points

• Key points:
• Food inflation moderated to 0.3% mom on the back of a correction in fresh fruit and vegetable prices (-3% mom) whereas processed food inflation remained strong with 1.5% mom.
• Core prices accelerated back (despite supportive base effects) on the back of strengthening basic and durable goods prices which were weaker in the previous two months.
• Services prices continued to increase across-the-board, confirming a deepening inertia impact.
• Cost-push factors remain elevated although producer prices inflation moderated compared to previous months (1.5% mom) with an annual inflation declining to 44%.
• High food inflation strengthening cost-push factors, and potentially ongoing energy price hikes following the pressures from global prices maintain risks on the upside for inflation outlook.

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