Turkey's August inflation figures above expectations

Turkey’s August inflation figures above expectations

Turkey's both consumer price index and producer price index were higher than market expectation in August. Turkey's State Institute of Statistics (DIE) disclosed that the country's consumer price index (CPI) rose 0.85 percent and producer price index (PPI) increased 1.04 percent in August compared to the previous month. Accordingly, year-on-year CPI increased to 7.91 percent, while year-on-year PPI stood almost constant at 4.32 percent. On the PPI front, the 4.35 percent increase in petroleum prices and the 19 percent rise in tobacco prices drove the manufacturing sector and thus the headline figure higher. The depreciation of Turkish currency also affected the PPI figure negatively. On the CPI front, the 1.42 percent increase in transportation prices and 16.87 percent rise in alcohol and tobacco prices drove the headline figure higher. The CPI, excluding food, energy, alcohol and indirect taxes posted a decline of 0.03 percent in August. Despite the robust August inflation figures, Turkey's Central Bank (TCMB) is expected to achieve the year-end target of 8 percent for CPI. Furthermore, TCMB is expected to maintain its overnight rate level at 14.25 percent.