Turkey: Inflation surges in June
Consumer prices rose 2.61% from the previous month in June, up markedly from May’s 1.62%, according to data released by the Turkish Statistical Institute (Turkstat). June’s price rise was driven by higher prices for food and non-alcoholic beverages, transportation and communication.
Inflation increased for the third consecutive month, fueled by the depreciation of the currency and elevated domestic demand, soaring from 12.2% in May to 15.4% in June. In addition, core inflation rose sharply, from 12.6% in May to 14.6% in June. Annual average inflation ticked up from 11.1% in May to 11.5% in June. The lira lost ground after Turkstat released the figures, which will heap more pressure on the Central Bank to adopt an even tighter monetary stance.
Looking ahead, inflation could rise further in the near term, due to the pass-through effects of the weaker lira, higher inflation expectations and ongoing fiscal stimulus. Price pressures should gradually ease towards the end of this year, although the evolution of the lira remains a key source of uncertainty to the inflation outlook.