Turkey Inflation Beats Expectations

According to data released by the Statistics Office this morning, headline CPI was up 1.8% mom, compared to the consensus forecast of 1.25% mom. Meanwhile year-on-year headline inflation is up to 7.71%, quietly higher than CBT’s target.

Food price inflation surprised the market on the upside, remaining at 11.4% yoy in October, which is the main component of the calculation. In addition, core items (excluding food, energy and tobacco) was up to 7.5% year-on-year inflation in October, comparing to %7.0% in September.

The outlook for price stability is highly negative in my opinion.

Turkey Inflation Chart 1 - Headline & Core Inflation for the last 10 years and the trendline

Turkey Inflation Chart 2 - Food Prices

The recent depreciation in Turkish Lira will drive the CPI higher.

Well, actually I do not know how but the projected inflation rate by the Central Bank of Turkey at the end of 2014, which is 5.3%, as well as the market sees this as an impossible target to reach.

More tightening should be expected by the CBT to support the Turkish Lira. As a result, it is likely to see higher interest rates both in money market and credit market. Another is important is that, we might see an increase in the total amount of FX deposits in banks, while total amount of TRY deposits dramatically falls. These worrisome developments in the inflation side might be in the FI market in double time, as USDTRY hit 2.02 this morning.

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.



Nothing contained anywhere on this site constitutes or should be construed as investing or financial advice, suggestion, or recommendation. Please consult a financial professional and do due diligence before engaging in any purchase or sale of securities and other assets.


TurkishMarketNews.Com is platform for providing financial, economic and politic data with a neutral point of view on mainly Turkey, and on emerging markets as we aim to be an alternative to mainstream media.


Feel free to contact us if you wish to discuss any matter by writing to oguz (at) turkishmarketnews (dot) com.