Transport prices drive Turkey's inflation rate in March

Transport prices drive Turkey's inflation rate in March

ISTANBUL - Hürriyet Daily News
Transport prices drive Turkeys inflation rate in March

This picture shows a usual heavy traffic scene from Istanbul. Transportation prices increased the most in March with 1.15 percent compared with February, figures show. AA photo

Turkey’s consumer inflation for March remained at 10.43 percent year-on-year last month, with liquors and tobacco suffering the most, with an annual rise of more than 18 percent, the Turkish Statistical Institute’s (TÜİK) monthly report showed yesterday.

The consumer and producer inflation figures were lower than market expectations in March, on the back of falling food prices; however, recent hikes in energy prices are expected to raise inflation rates in April.

“Inflation data are below our estimates, and this surprise stems from a fall in food prices. Core inflation dropped to 7.9 percent from 8.1 percent, which is in line with our estimates,” Reuters quoted the Ekspresinvest economist Nilüfer Sezgin as saying.

The only factor that might potentially change the Central Bank’s monetary policy is the latest price hikes in natural gas and electricity, she said, adding that the Central Bank is continuing to relax the policy rate.

Consumer prices rose by 0.41 percent in March compared with the previous month. Market expectation was nearly 0.6 percent, according to Reuters. The highest monthly consumer price increase in a major expenditure category was in transportation prices, which rose 1.15 percent. 

“The highest increase was 18.47 percent in the index for alcoholic beverages and tobacco compared with the same month of the previous year,” said TÜİK, adding that there was no change in monthly comparison. 

The figure for food and non-alcoholic beverages was 11.25 percent annually, but it dropped by 0.33 percent in March compared with February.

Producer inflation falls

Producer inflation recorded a slight fall annually, but was well below the market’s expectation of a 0.74 percent rise. Monthly change in March’s Producer Price Index (PPI) was at 0.36 percent. 
The PPI rose 8.2 percent compared with the same month last year. The figure was at 9.15 percent for February. Monthly changes in producer prices were –1.16 percent in the agriculture sector and 0.7 percent in the industrial sector. 

“The highest monthly increase in producer prices for industrial activities was a 5.53 percent increase in the index for coke and refined petroleum,” the TÜİK report said.

“The biggest changes in [consumer] inflation came from the transportation and housing sectors,” Akbank’s Economic Research Department said in an e-mailed comment yesterday. 

Transportation prices rose 1.15 percent and contributed about 0.2 point to the overall monthly inflation rate due to oil price hikes. The annual reading was 10.8 percent, with a contribution of 1.8 points to annual inflation. The transportation sector is the second most weighty factor affecting consumer inflation, with 16.7 percent, after food.