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Turkey Inflation December 2018

Turkey: Inflation dips further in December

Consumer prices fell 0.40% from the previous month in December, up from November’s 1.44% decrease, according to data released by the Turkish Statistical Institute (Turkstat). December’s drop was chiefly driven by lower prices for clothing and footwear; and transport.

Inflation fell from 21.6% in November to 20.3% in December, the second consecutive monthly slowdown, while core inflation went down from 20.7% to 19.5%. The lessening of price pressures was likely driven by numerous factors, chiefly government tax cuts on some goods, temporary price discounts, lower oil prices and the recovery in the lira.

Looking to Q1, a less supportive base effect will keep inflation elevated, although this could be partly offset by the recent announcement that tax cuts will be extended till end-March. Over the rest of the year, inflation should decline on weak domestic demand. The evolution of the volatile lira and monetary and fiscal policy will be key factors to watch.

Turkey Inflation Forecast

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