Turkey: Inflation rises in July
Turkish consumer prices jumped 1.36% month-on-month in July, markedly up from the prior month’s soft 0.03% increase. The noticeable pick-up was driven by a steep rise in transportation costs, while prices for furnishing and household equipment as well as for housing also increased markedly. This offset significantly cheaper clothing and footwear; and food and non-alcoholic beverages.
Inflation also intensified, rising to 16.7% in July, up from June’s 15.7%. Core inflation, which excludes volatile price items such as energy and food, picked up to 16.2% in July from 15.9% in the prior month.
Muhammet Mercan, chief economist at ING Turkey, noted that the reversal of the downward trend in inflation in July was likely temporary and mainly attributable to “electricity price hikes and other administrative price adjustments, as well as the removal of tax incentives on automobiles and some durable consumer goods.” Looking ahead, Mercan expects inflation to resume its downward path and to fall at an accelerated pace in September and beyond due to a large base effect; as a result, “we expect two more rate cuts in September and October”, Mercan added.