Turkish consumer inflation has exceeded 10%, climbing back to double digits after 58 months. The factors pushing prices up are unlikely to subside in the coming months, meaning that a double-digit overall inflation at the end of the year is now a strong prospect for the country.
The Consumer Price Index, which denotes the change in the prices of goods and services that consumers buy, was up 10.1% year on year in February. The increase was higher in some categories and lower in others. In food and housing, which account for 24% and 15% of the consumer basket, respectively, the increase stood at 8.7% and 7.4%. Meanwhile, in the transport and tobacco-alcohol categories, which make up 14% and about 6% of household budgets, respectively, inflation stood at 18% and nearly 22%.
When it comes to the Domestic Produce Price Index, which covers the industrial, mining and energy products that producers sell, the year-on-year price increase exceeded 15%. This is, in fact, the main indicator that consumer inflation is unlikely to climb down from double-digit figures throughout 2017. With producers having hiked their prices 15%, the impact on consumers in the coming months is simply inevitable.
The inflation in certain goods in the producer basket is even more striking. In the textile category, which accounts for about 9% of the basket, the year-on-year price increase was close to 18%. In iron, steel and other metals, it stood at a staggering 44%. Here, the global rise in the prices of ore, scrap iron and coke was, no doubt, influential. On top of it came the Turkish lira’s dramatic depreciation, which meant that importing those goods became much more expensive for Turkish producers, leading to a fast increase in their prices. Electricity and natural gas prices, meanwhile, were kept in check, and even lowered some 6%. In categories such as domestic appliances, electronic goods, chemicals and machinery, which rely the most on imported inputs, the year-on-year price hikes ranged between 16% and 21%. The government had introduced tax cuts for the domestic appliances and furniture sectors, singling them out as the most hard-pressed, but even those measures failed to keep the price increases at single-digit figures.
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