Consumer inflation takes a hit from rising fuel costs

Consumer inflation takes a hit from rising fuel costs

ISTANBUL- Hürriyet Daily News
Consumer inflation takes a hit from rising fuel costs

Transport and fuel costs were the biggest factors in the high January consumer inflation rate, which maintained its double digit level after December 2011.

Consumer price indices increased to a three year high in January 2012 with a biggest contribution from fuel costs, the Turkish Statistical Institute’s monthly inflation report revealed Feb. 3. Consumer prices rose 10.61 percent compared to January 2011. This is the highest reading since November 2008, when consumer prices rose 10.76 percent annually. December 2011 reading was at 10.45 percent.

Ahead of the release, market consensus forecasted a slightly lower reading at 10.56 percent year on year, according to a report by TD Securities. Consumer prices rose 0.56 percent in January compared to December 2011.

“The increase in inflation was driven partly by negative base effects as a softer January 2011 print rolled out of the calculation window, while the cheaper Turkish Lira-denominated oil prices did not prevent ‘transport’ and fuel costs from increasing to 12.90 percent year on year (from a prior 12.22 percent), which was the single biggest upside factor. ‘Housing, water and electricity’ prices also increased markedly to 8.99 percent year on year (from a prior 8.20 percent),” the report said.

Producer prices hiked 0.38 percent in January compared to December 2011. The increase in producer prices annually was 11.13 percent, down from 13.33 percent in December.

As of December 2011, annual inflation was 6.95 percent in consumer prices, and 11.11 percent in producer prices. The Central Bank had a target of 5.5 percent inflation last year. Central Bank Gov.

Erdem Başçı wrote an open letter last week to the government to explain the deviating 2011 inflation target, putting the blame on “cumulative hikes in the exchange rate and commodity prices, the fast rise in unprocessed food prices and a change in administrated prices.”

The Central Bank also revised its inflation projections in the first quarter Inflation Report to 6.5 percent for year-end 2012, from 5.2 percent in the October report. “It is highly likely that annual inflation will stay significantly above the target until the last quarter of the year,” it said.