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Turkey Inflation September 2018

Turkey: Inflation skyrockets in September, markedly overshoots expectations

Consumer prices rose 6.30% from the previous month in September, up from August’s 2.30% rise, according to data released by the Turkish Statistical Institute (Turkstat). September’s price increase was chiefly driven by higher prices in the transportation; furnishing and household equipment; and food and non-alcoholic beverages sub-sectors.

Inflation increased for the sixth consecutive month, soaring from 17.9% in August to 24.5% in September—an over one-decade high—fueled by the huge depreciation of the currency observed in August. In addition, core inflation reared up from 17.2% to 24.1%. The figures will renew pressure on the Central Bank to continue hiking rates.

Looking ahead, inflation could rise further in the near term, as the pass-through effects from the weaker lira continue. Producer price inflation reached 46.2% in September, and firms could pass these costs on to consumers in the coming months. However, price pressures should then gradually ease on softening domestic demand, although the extremely volatile currency remains a key source of uncertainty to the outlook, and elevated inflation expectations will make it difficult to reduce inflation rapidly.

Turkey Inflation Forecast

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