Turkish Inflation Unexpectedly Quickens in August on Food Prices

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Turkish inflation unexpectedly accelerated for a third month in August as elevated food costs offset a tax cut on some personal cars.

Prices rose an annual 19.25% through August, up from 18.95% the previous month. The median estimate in a Bloomberg survey of 21 analysts pointed to a deceleration to 18.75%. Prices rose 1.12% in the month.

Key Insights

  • Food prices, which account for roughly a quarter of the consumer basket, rose 29%, compared with 24.92% the previous month, well above the central bank’s year-end prediction of 15%
  • Energy prices rose 20.72% from a year earlier, compared with 21.51% in July, as global oil prices prices retreated
  • A core inflation index showed prices excluding volatile items such as food and energy also rose an annual 16.76%, down from 17.22% during the same period, still a sign of strong inflationary pressures underlying the headline figure

Markets

  • The lira depreciated 0.3% against the dollar after the data were released, trading at 8.3027 per dollar at 10:02 a.m. in Istanbul
  • Global oil prices retreated in August and the lira appreciated 1.7% against the dollar, alleviating some of the pressure on inflation
Turkish Inflation Unexpectedly Quickens in August on Food Prices

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  • Producer prices rose an annual 45.52% through last month, highlighting risks to the inflation outlook from cost pressures
  • The gap between the central bank’s one-week repo benchmark rate and consumer inflation dropped to negative 25 basis points
  • Retail inflation in Istanbul, Turkey’s business capital, accelerated to 18.89% in August from 17.38% in July
  • In August, the government tweaked tax base limits for some passenger cars, which led to an approximately 15% decline in the final prices of vehicles with price tags of up to 300,000 liras
  • The Turkish central bank’s next rate-setting meeting is scheduled for Sept. 23

©2021 Bloomberg L.P.

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