Published On: Sun, Feb 10th, 2019

How is inflation doing in Turkey lately? A Report by the Central Bank of Turkey

Based on a report issued by CBRT the administration does not have a good enough reason to be happy about the performance of inflation which has almost always been the top challenge for Turkey – not to forget the terror issue, certainly.

According to the findings of the Central Bank, in the last quarter of 2018, consumer inflation decreased by 4.2 percentage points compared to the end of the previous quarter and was realized at 20.30 percent which was below the forecast in October Inflation Report.

A similar outlook was observed in inflation figures regarding unprocessed food, energy, alcohol-tobacco and non-gold consumer inflation.

The decline in inflation was driven by the upward movement of the Turkish lira against US dollar, the fall in commodity prices, tax cuts for certain durable goods and the weak course of demand conditions.

In the last quarter of the year, basic goods and energy groups had a substantial impact on the decline in annual inflation.

On the other hand tax cuts in automobiles, furniture and white goods have played an important role since November. In the energy group, the decline in international oil prices was positively reflected. Annual inflation in food group maintained its high course. Annual services inflation continued to rise due to the cumulative cost increases.

Despite the decline in producer inflation in the last quarter, cost pressures on consumer prices are still strong. On the other hand, the weakening in domestic demand continued to give support to inflation to decrease in a slight manner. According to the spread indices, the tendency of the economic units to increase prices decreased compared to the previous quarter. However, indicators of trend and pricing behavior are still historically high.

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