Published On: Sat, Nov 2nd, 2019

Central Bank report says energy prices to affect October inflation in Turkey

Central Bank’s September Survey shows year-end inflation expectation at 13.96

Based on the Central Bank’s Price Developments Report for September, it was noted that the decline in inflation was mainly due to the core goods and food sub-items. Stating that energy prices would affect October inflation, the Central Bank also said, “The monthly increase in energy prices will continue in October with the effect of electricity price adjustment”.

According to the same report, consumer prices rose by 0.99 percent in September, annual inflation decreased by 5.75 points to 9.26 percent. Due to the high base effect in the previous year, annual inflation in all subgroups registered a significant decline. The decline in inflation was mainly driven by the sub-items of core goods and food.

While the favorable outlook for food inflation continued in this period and the annual inflation in the energy group declined, prices rose sharply on a monthly basis. The stability in the Turkish lira as well as the improvement in inflation expectations and the course of domestic demand conditions supported the decline in annual inflation in core inflation indicators.

Prices for service sector are observed to have climbed by 1.47 percent, in September while the group’s annual inflation figure fell by 1.65 points to 12.54 percent.

Annual inflation in communication and rent has remained unchanged. The rise in the annual inflation in the transport group was driven by price increases in the passenger transport items.

Annual inflation in core goods fell by 2.94 percentage points to 2.98 percent in September, largely due to the base effect. Prices of durable goods showed a limited decline due to the fall of 0.81 percent in automobile prices, despite the increase of 2.63 percent in white goods prices.

In line with these developments, annual core goods inflation declined significantly due to the base effect as well as the outlook for the Turkish lira and the moderate course of domestic demand conditions.

Energy prices increased by 3.17 percent in September, but annual energy inflation fell to 4.86 percent due to the base effect. During this period, natural gas prices rose by 13.92 percent and fuel prices rose by 2.80 percent due to developments in the exchange rate and oil prices. The upward trend in energy prices on a monthly basis are expected continue in October due to the electricity price adjustment.

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