The Consumer Price Index rose by 1.94% in June in Turkey surpassing expectations; the annual rate reached 17.53%. Analysts at BBVA expect inflation to hover around 18.5% till November and end the year at near 16% with base effects.
Key Quotes:
“Core inflation reflected the continuing exchange rate pass-thru impact and strengthening supply-side factors after the reopening in the economy with 2.5% mom on the back of basic goods and services prices inflation.”
“Still strong domestic demand, higher commodity prices, lag impact of exchange rate pass thru, deteriorated inflation expectations and other supply-side problems, risks remain tilted to the upside.”
“Higher commodity prices, deepening cost push factors, ongoing exchange rate pass thru and still growing domestic demand keep the risks on the upside for the inflation outlook. We revise our year-end inflation forecast to 16% and expect the CBRT to start an easing cycle in October but in a much more gradual manner.”
