Turkey: Inflation continues to rise in July
August 3, 2018
Consumer prices rose 0.55% from the previous month in July, down from June’s 2.61% rise, according to data released by the Turkish Statistical Institute (Turkstat). July’s price increase was driven by higher prices for transportation; and hotels, cafés and restaurants.
Inflation increased for the fourth consecutive month, from 15.4% in June to 15.8% in July, fueled by the depreciation of the currency and an unfavorable base effect. In addition, core inflation ticked up from 14.6% to 15.1%, while annual average inflation rose from 11.5% to 12.0%.
Looking ahead, inflation is likely to rise further in the near term, due to the pass-through effects of the weaker lira and elevated inflation expectations. Price pressures should gradually ease next year on softening domestic demand, although the extremely volatile currency remains a key source of uncertainty to the inflation outlook.
Author: Oliver Reynolds, Economist