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Turkey: Monthly Price Developments - April 2019

IM Insights
By IM Insights
3 months ago
Turkey: Monthly Price Developments - April 2019

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  1. April Price Developments 6 May 2019
  2. April Price Developments | 6 May 2019 Summary In April, consumer prices rose by 1.69% and annual inflation edged down by 0.21 points to 19.50%. Annual inflation in core indicators continued to decelerate on the back of core goods while services inflation was relatively flat. The underlying trend of core indicators remained low. In this period, energy prices were up month-on-month but down year-on-year due to base effects. Annual food inflation continued to rise mainly due to the prices of unprocessed food. Price Developments are published within one working day following the announcement of price statistics by the Turkish Statistical Institute (TurkStat). Price Developments, which include CBRT’s initial remarks on the inflation figures of the previous month, aim to contribute to a sounder interpretation of the monthly inflation developments by the public during the period between the announcement of the official price statistics and the Monetary Policy Committee meeting. 1
  3. April Price Developments | 6 May 2019 Evaluations In April, consumer prices rose by 1.69% and annual inflation edged down by 0.21 points to 19.50% (Chart 1). In this period, annual rates of change in indices B and C declined by 0.94 points and 1.23 points to 16.78% and 16.30%, respectively (Chart 2). Across subcategories, core goods, energy and services groups recorded a month-on-month declines of 0.55, 0.25 and 0.05 points, respectively, in their contributions to annual CPI inflation whereas food and alcohol-tobacco groups made larger contributions, up 0.33 points each. Chart 1: CPI and D (Annual % Change) Chart 2. CPI, B and C (Annual % Change) CPI B C 16 12 12 8 8 4 4 04.19 16 12.18 20 08.18 20 04.18 24 12.17 24 08.17 28 04.17 28 04.19 12.18 08.18 D 04.18 12.17 08.17 04.17 CPI Three-month averages of seasonally-adjusted core inflation indicators remained almost flat (Chart 3). The underlying trend saw a slight fall in services but displayed no noticeable change in core goods (Chart 4). Chart 3. B and C (Seasonally adjusted, Annualized 3Month Average % Change) Services Core Goods (Left Axis) 60 100 25 50 80 20 40 60 30 40 20 20 10 0 15 10 5 04.19 -5 12.18 -40 08.18 -10 04.18 0 12.17 -20 08.17 0 04.17 04.19 12.18 08.18 C 04.18 12.17 08.17 04.17 B Chart 4. Core Goods and Services (Seasonally adjusted, Annualized 3-Month Average % Change) In April, prices of services rose by 0.81%, and annual services inflation remained almost flat at 15.15% (Chart 5 and Table 1). Annual inflation hardly changed across subcategories compared to a month earlier (Chart 6). The increase in prices for transport services was led by intercity road passenger transport fares. Among other services, labor-intensive items (maintenance-repair, domestic services, barber-hairdresser, etc.) registered large price increases. Prices for education services continued to display high price increases, which is partly driven by backward indexation. Meanwhile, monthly rent inflation maintained its mild course. 2
  4. April Price Developments | 6 May 2019 Chart 5. Core Goods and Services (Annual % Change) Core Goods Chart 6. Services (Annual % Change) Other Services Communication S. Rent Services Restaurants & Hotels Transport S. 40 21 35 18 30 15 25 12 20 9 0 12.18 04.17 04.19 0 08.18 3 04.18 5 12.17 6 08.17 10 04.19 12.18 08.18 04.18 12.17 08.17 04.17 15 Annual core goods inflation fell by 2.47 points to 17.45% in April (Chart 5). Annual inflation continued to fall across all subcategories (Chart 7). Prices increases in furniture (6.15%), automobiles (1.00%) and white goods (2.19%) stood out in the rise of durable goods prices (1.97%). On the other core goods front, prices continued to rise moderately. In this period, clothing prices rose at a much slower pace than seasonal averages. In sum, despite the depreciating Turkish lira, core goods inflation decelerated due also to the weak course of domestic demand. Chart 7. Core Goods (Annual % Change) Durable Goods excl. Gold Chart 8. Food and Nonalcoholic Beverages and Energy (Annual % Change) Other Core Goods Food and Nonalcoholic Beverages Clothing and Footwear Energy 35 50 30 40 25 30 20 15 20 04.19 12.18 08.18 0 04.18 0 12.17 5 08.17 10 04.17 04.19 12.18 08.18 04.18 12.17 08.17 04.17 10 In April, energy prices rose by 1.00% (Table 1) due to the month-on-month increase of 2.35% in fuel prices driven by the exchange rate and rising oil prices. The adoption of a sliding scale helped prevent the fuel price outlook from getting any worse in this period. All in all, annual energy inflation fell to 14.42% owing to base effects (Chart 8). Annual inflation in food and non-alcoholic beverages increased by 2.09 points to 31.86% in April (Chart 8 and Table 2). This upsurge was driven by the annual inflation of unprocessed food prices that climbed to 45.69% (Chart 9). Specifically, annual inflation in fresh fruits and vegetables hitting 73.66% is worth noting (Chart 10). Prices of potatoes and white meat rose sharply, by 23.17% and 10.84% respectively, while the 3
  5. April Price Developments | 6 May 2019 trend of price increases in red meat accelerated significantly in April (6.39%). Processed food prices rose by 0.97% while annual processed food inflation inched up by 0.47 points to 19.16%. Prices climbed across all subcategories of processed food, with bread and cereals in the lead. Thus, annual inflation increased to 23.26% in food excluding fresh fruits and vegetables (Chart 10). Prices of tobacco products were up 7.45% in April, which reflects the first-round spillovers of the proportional SCT on tobacco being raised from 63% to 67%. Consequently, annual inflation went up by 6.95 points to 9.66% in alcohol-tobacco. With price adjustments ongoing, tobacco inflation is likely to increase further in May. Chart 9. Processed and Unprocessed Food (Annual % Change) Chart 10. Fruits-Vegetables and Other Food (Annual % Change) Food Excl. Fresh Fruits and Vegetables Processed Food Unprocessed Food 50 Fresh Fruits and Vegetables (Left Axis) 80 30 70 40 30 20 25 60 50 20 40 15 30 20 10 10 10 5 0 04.19 12.18 08.18 04.18 12.17 0 08.17 -10 04.17 04.19 12.18 08.18 04.18 12.17 08.17 04.17 0 4
  6. April Price Developments | 6 May 2019 D-PPI Domestic producer prices rose by 2.98% in April and annual inflation increased by 0.48 points to 30.12% (Chart 11). This rise was led by exchange rate developments and higher oil prices. In this period, the seasonally adjusted underlying trend of manufacturing prices excluding petroleum and base metals recorded an increase (Chart 12). Chart 11. D-PPI and Manufacturing (Annual % Change) D-PPI Chart 12. Manufacturing Excluding Petroleum and Base Metals Seasonally Adjusted, Annualized 3-Month-Average % Change Annual % Change Manufacturing 50 100 80 40 60 30 40 20 04.19 12.18 08.18 04.18 -20 12.17 0 08.17 0 04.17 10 04.19 12.18 08.18 04.18 12.17 08.17 04.17 20 According to main industrial groupings, prices were up in all subgroups, energy in particular (Table 3). The rise in energy prices was led by prices of petroleum products and electricity. Prices of durable goods were driven higher by furniture, while prices of nondurable goods were largely pushed up by meat products. Price increases in intermediate goods were mostly led by iron-steel, textile yarns and fibers, and basic chemicals, while prices of capital goods were driven higher by metal construction products, parts and accessories of motor vehicles, and machines. As a result, producer prices-driven cost pressures on consumer prices strengthened. Chart 13. Intermediate and Capital Goods (Annual % Change) Capital Goods Chart 14. Consumption Goods (Annual % Change) Non-durable Consumption Goods Durable Consumption Goods (Excl. Jewelry) Intermediate Goods 60 35 30 50 25 40 20 30 15 10 04.19 12.18 08.18 0 04.18 0 12.17 5 08.17 10 04.17 04.19 12.18 08.18 04.18 12.17 08.17 04.17 20 5
  7. April Price Developments | 6 May 2019 Tables Table 1. CPI and Subcategories (% Change) Monthly Annual April 2019 April 2018 April 2019 April 2018 1.69 1.87 19.50 10.85 1. Goods 2.05 2.28 21.25 11.50 Energy 1.00 2.76 14.42 11.99 Food and non-alcoholic beverages 1.40 -0.21 31.86 8.81 1.78 -1.01 45.69 3.69 Fresh fruits and vegetables -3.67 -5.32 73.66 -5.14 Other unprocessed food 6.14 1.70 30.21 9.77 0.97 0.58 19.16 13.98 Bread and cereals 0.98 0.56 20.92 11.76 Other processed food 0.97 0.58 18.23 15.24 Goods excluding energy and food 2.89 3.83 16.90 13.09 2.29 4.44 17.45 15.46 1.97 3.44 13.81 18.74 5.46 10.59 5.67 12.04 0.68 1.51 32.68 13.36 Alcoholic beverages and tobacco 6.77 0.01 9.66 0.90 Gold 3.72 5.42 34.87 16.60 2. Services 0.81 0.86 15.15 9.27 Rents 0.61 0.74 9.98 9.54 Restaurants and hotels 1.13 1.15 19.58 11.88 Transport 0.91 0.74 10.88 8.01 Communication 0.01 0.00 12.48 0.85 Other 0.86 1.04 16.92 10.34 1.45 2.27 16.78 12.54 1.56 2.63 16.30 12.24 D - CPI excluding unprocessed food, alcoholic beverages and tobacco 1.42 2.39 16.70 12.50 F – CPI excluding administered prices 1.63 2.12 21.31 11.76 CPI Unprocessed food Processed food Core goods Durable goods (excluding gold) Clothing and footwear (*) Other core goods 3. Core Measures B - CPI excluding unprocessed food, energy, alcoholic beverages tobacco and gold C - CPI excluding energy, food and nonalcoholic beverages, alcoholic beverages, tobacco and gold Source: TurkStat. (*) Does not cover clothing services. 6
  8. April Price Developments | 6 May 2019 Table 2. CPI and Subcategories (% Change) April 2019 Weight April 2018 Monthly Annual Monthly Annual 100 1.69 19.50 1.87 10.85 Food and non-alcoholic beverages 23.29 1.40 31.86 -0.21 8.81 Alcoholic beverages and tobacco 4.23 6.77 9.66 0.01 0.90 Clothing and footwear 7.24 5.36 5.91 10.40 12.03 Housing 15.16 0.37 15.31 1.29 10.63 Household equipment 8.33 2.65 27.64 2.11 16.75 Health 2.58 0.49 19.75 0.46 9.97 Transport 16.78 1.19 12.55 3.54 16.45 Communication 3.69 -0.30 10.20 -0.04 -0.06 Recreation and culture 3.29 1.04 19.33 1.67 8.18 Education 2.40 1.26 12.82 0.68 10.86 Restaurants and hotels 7.86 1.13 19.58 1.15 11.88 Miscellaneous goods and services 5.15 1.94 27.47 2.32 12.03 CPI Source: TurkStat. Table 3. D-PPI and Subcategories (% Change) Weight April 2019 April 2018 Monthly Annual Monthly Annual 100 2.98 30.12 2.60 16.37 Mining 3.06 3.45 25.42 1.79 15.90 Manufacturing 89.31 2.86 28.31 2.79 17.04 86.19 2.68 27.86 2.58 16.34 76.71 2.44 27.95 2.46 14.56 Electricity, gas, steam and air-conditioning sup. 6.52 4.96 57.87 0.76 8.88 Water supply 1.11 0.36 0.33 0.79 4.80 Intermediate Goods 2.54 29.69 2.70 19.80 Durable Consumption Goods 3.35 23.55 2.30 15.15 3.36 22.72 2.34 14.96 Non-Durable Consumption Goods 3.21 25.03 2.54 9.15 Capital Goods 1.83 29.87 2.20 19.45 Energy 5.29 47.55 2.92 17.66 D-PPI Manufacturing excl. petroleum products Manufacturing excl. petroleum products and base metals D-PPI (MIGs Classification) Durable Consumption Goods (Excl. Jewelry) Source: TurkStat. 7