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Turkey: Monthly Price Developments - May 2021

IM Insights
By IM Insights
2 years ago
Turkey: Monthly Price Developments - May 2021


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  1. MAY PRICE DEVELOPMENTS 4 JUNE 2021
  2. May Price Developments |4 June 2021 2 Summary In May, consumer prices were up by 0.89%, and annual inflation decreased by 0.55 points to 16.59%. Annual inflation declined in energy and core goods groups, remained almost unchanged in the food group, but increased in services. In this period, energy prices increased due to the developments in TLdenominated oil prices in addition to the adjustment in the sliding scale system and the termination of ceiling price practices; but the group’s annual inflation declined amid the high base effect. Price increases in some items followed a low course following the interruption in activity during the May lockdown. Accordingly, core goods inflation displayed a mild course, the clothing sector in particular, despite the exchange rate developments. The course of services inflation was shaped by soaring transport prices due to capacity restrictions. In this period, there has been a widespread and accelerated rise in commodity prices. The developments in TL-denominated import prices and ongoing supply constraints in some products caused producer prices to retain their rising trend, maintaining cost pressures. Against this background, annual inflation and trends of the B and C indices remained high, albeit with some decline. Price Developments are published within one working day following the announcement of price statistics by the Turkish Statistical Institute (TurkStat). Price Developments, which include the 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.
  3. May Price Developments |4 June 2021 3 Evaluations In May, consumer prices were up by 0.89%, and annual inflation decreased by 0.55 points to 16.59% (Chart 1). In this period, annual rates of change in the B and C indices fell by 0.62 and 0.78 points to 17.49% and 16.99%, respectively (Chart 2). Contributions of subcategories to annual consumer inflation increased by 0.09 points in services month-onmonth, while core goods, energy and alcohol-tobacco-gold group and the food group declined by 0.52, 0.05, 0.04 and 0.03 points, respectively. Chart 1: CPI and D (Annual % Change) CPI B C 8 8 4 4 05.21 12 01.21 12 09.20 16 05.20 16 01.20 20 09.19 20 05.19 05.21 01.21 09.20 D 05.20 01.20 09.19 05.19 CPI Chart 2. CPI, B and C (Annual % Change) Three-month averages of seasonally adjusted core inflation indicators suggest that the trends of B and C indices declined (Chart 3). In this period, the inflation trend continued to slow down in core goods and processed food groups, but remained almost flat in the services group (Chart 4). Chart 3. B and C Indices (Seasonally adjusted, Annualized 3-Month Average % Change) Chart 4. Main Components of B Index (Seasonally adjusted, Annualized 3-Month Average % Change) Services Core Goods (Adjusted for Tax Effect) Processed Food* B (Adjusted for Tax Effect ) C (Adjusted for Tax Effect ) 30 25 30 20 15 20 10 10 5 05.21 01.21 09.20 05.20 01.20 09.19 0 05.19 05.21 01.21 09.20 05.20 01.20 09.19 0 05.19 40 *There is no seasonal effect in the processed food group. In May, services prices increased by 1.18%, and the group’s annual inflation rose by 0.50 points to 13.62% (Chart 5). Annual inflation surged in the transport services group, increased rather slightly in restaurants-
  4. May Price Developments |4 June 2021 4 hotels, communication and rent, but declined somewhat in other services (Chart 6). Annual transport services inflation was pushed upwards by increased intercity bus fares (29.46% month-on-month) due to the pandemic-induced capacity restrictions. Price increases in restaurants-hotels were driven by catering services, while the monthly price increase proved more limited (0.95%) owing also to the lockdown. However, stimulated by the low base in the same month of the previous year, the group’s annual inflation remained on an upward track. In communication services, monthly price increases were attributed to internet services tariffs. Chart 5. Core Goods and Services (Annual % Change) Other Services Communication S. Rent Services Restaurants & Hotels Transport S. 25 10 5 5 0 0 05.21 01.21 10 09.20 15 05.20 15 01.20 20 05.19 20 05.21 01.21 09.20 05.20 01.20 09.19 05.19 25 09.19 Core Goods Chart 6. Services (Annual % Change) In May, annual core goods inflation dropped by 2.29 points to 20.84% (Chart 5). In this period, annual inflation decreased across all subcategories, with clothing and footwear in the lead (Chart 7). The ongoing upward course in clothing and footwear prices lost considerable pace due to the pandemic-led restrictions, and the group’s annual inflation decreased by 5.40 points to 5.56%. Prices of durable consumption goods remained on the rise in this period (0.91% month-on-month), and automobile and furniture groups were shaped by exchange rate developments and commodity prices, while the monthly price fall in electrical and non-electrical appliances (-0.35%) restricted the group’s inflation. In other core goods, prices exhibited a limited uptick (0.21% month-on-month), and the group’s annual inflation remained almost unchanged at 18.59%. Chart 7. Core Goods (Annual % Change) Chart 8. Food and Non-alcoholic Beverages and Energy (Annual % Change) Food and Non-alcoholic Beverages Energy 20 15 10 10 0 5 -10 0 05.21 20 01.21 30 09.20 25 05.20 40 01.20 30 09.19 50 05.19 05.21 01.21 09.20 05.20 01.20 09.19 05.19 Durable Goods excl. Gold Other Core Goods Clothing and Footwear
  5. May Price Developments |4 June 2021 5 Energy prices rose by 1.50% in May (Table 1). In this period, in addition to the developments in TLdenominated oil prices, the adjustments in the sliding scale system and termination of price ceiling practices caused fuel prices to increase by 3.84%. Despite the rise in SCT in May, the implementation of the sliding scale eliminates a substantial inflationary effect. Prices of natural gas and solid fuel increased by 1.33% and 0.93%, respectively, which proved noteworthy in the group. Despite the uptick in fuel prices, annual energy inflation dropped by 0.73 points to 17.71% due to the base effect (Chart 8). In May, prices of food and non-alcoholic beverages increased by 0.29% month-on-month, and the group’s annual inflation remained almost flat with 17.04% (Chart 8 and Table 2). In this period, annual inflation edged down by 0.06 points to 14.61% in the unprocessed food group, and crept up by 0.13 points to 19.49% in the processed food group (Chart 9). Seasonally adjusted data for unprocessed food suggest a price increase in fresh fruits and vegetables, driven by vegetables. In this period, among other unprocessed food, prices of red meat maintained the uptrend. In May, processed food prices rose by 0.87% month-onmonth, and price hikes in bread and cereals as well as non-alcoholic beverages stood out. Against this background, annual food inflation excluding fresh fruits and vegetables reached 18.61% (Chart 10). 40 60 30 40 20 20 10 0 Fresh Fruits and Vegetables (Left Axis) 30 24 18 12 6 05.21 01.21 09.20 0 05.20 -20 01.20 05.21 01.21 09.20 05.20 01.20 09.19 0 05.19 Food Excl. Fresh Fruits and Vegetables Unprocessed Food 05.19 Processed Food Chart 10. Fresh Fruits-Vegetables and Other Food (Annual % Change) 09.19 Chart 9. Processed and Unprocessed Food (Annual % Change)
  6. May Price Developments |4 June 2021 6 D-PPI In May, domestic producer prices rose by a substantial 3.92%, and annual D-PPI inflation increased by 3.16 points to 38.33% (Chart 11 and Table 3), mainly due to exchange rate developments, ongoing increases in international commodity prices and supply constraints. All in all, the trend of manufacturing industry prices excluding petroleum and base metals remained on an upward track (Chart 12). Chart 11. D-PPI and Manufacturing (Annual % Change) D-PPI Chart 12. Manufacturing Excluding Petroleum and Base Metals Annualized 3-Month-Average % Change Annual % Change Manufacturing 50 50 40 40 30 30 20 20 10 10 0 05.21 01.21 09.20 05.20 01.20 09.19 -10 05.19 05.21 01.21 09.20 05.20 01.20 09.19 0 05.19 60 According to main industrial groupings, annual inflation soared in energy and intermediate goods (Table 3, Charts 13 and 14). In May, intermediate goods recorded a substantial price increase (5.20%), spreading across the group, which was mainly driven by iron-steel and ferroalloys, textile threads and fibers, plastic products as well as paper products and profiles. Annual energy inflation rose due to refined petroleum products as well as production and distribution of electricity. In capital goods, price increases were more prevalent in metal construction products and other general purpose machinery. Among durable consumption goods, the most notable price increases were seen in furniture, home appliances and jewelry, while meat products, other textile products and fats-oils were the key drivers of price increases in non-durable consumption goods. Overall, producer prices continued to exert pressure on consumer prices with an increasing magnitude. Chart 13. Intermediate and Capital Goods (Annual % Change) 20 20 15 10 10 0 5 -10 0 05.19 05.21 01.21 09.20 05.21 30 01.21 25 09.20 40 05.20 30 01.20 50 09.19 60 Non-durable Consumption Goods Durable Consumption Goods (Excl. Jewelry) 35 Intermediate Goods 05.20 01.20 09.19 05.19 Capital Goods Chart 14. Consumption Goods (Annual % Change)
  7. May Price Developments |4 June 2021 7 Tables Table 1. CPI and Subcategories (% Change) Monthly Annual May 2021 May 2020 May 2021 May 2020 CPI 0.89 1.36 16.59 11.39 1. Goods 0.79 1.63 17.86 11.44 Energy 1.50 2.13 17.71 5.23 Food and non-alcoholic beverages 0.29 0.24 17.04 12.87 -0.32 -0.27 14.61 10.14 Fresh fruits and vegetables -6.37 -3.28 9.96 11.37 Other unprocessed food 3.28 1.54 17.28 9.66 0.87 0.76 19.49 15.50 Bread and cereals 1.00 0.51 19.59 15.17 Other processed food 0.80 0.90 19.37 15.68 Goods excluding energy and food 0.92 2.49 18.37 12.48 Core goods 0.86 2.77 20.84 9.26 Durable goods (excluding gold) 0.91 2.27 30.74 12.90 Clothing and footwear (*) 1.78 6.99 5.56 7.56 Other core goods 0.21 0.40 18.59 5.62 Alcoholic beverages and tobacco -0.01 0.66 2.90 21.41 Gold 8.16 4.05 31.32 47.55 2. Services 1.18 0.73 13.62 11.28 Rents 0.72 0.45 9.72 9.52 Restaurants and hotels 0.95 0.16 17.73 10.94 Transport 5.04 1.84 13.72 16.63 Communication 1.00 0.47 8.03 5.02 Other 0.70 1.04 14.80 12.48 B - CPI excluding unprocessed food, energy, alcoholic beverages tobacco and gold 0.98 1.52 17.49 11.21 C - CPI excluding energy, food and non-alcoholic beverages, alcoholic beverages, tobacco and gold 1.01 1.68 16.99 10.32 D - CPI excluding unprocessed food, alcoholic beverages and tobacco 1.13 1.66 17.80 11.04 F – CPI excluding administered prices 1.00 1.60 18.13 9.69 Unprocessed food Processed food 3. Core Measures Source: TURKSTAT. (*) Does not cover clothing services.
  8. May Price Developments |4 June 2021 8 Table 2. CPI and Subcategories (% Change) Weight May 2021 May 2020 Monthly Annual Monthly Annual 100 0.89 16.59 1.36 11.39 Food and non-alcoholic beverages 25.94 0.29 17.04 0.24 12.87 Alcoholic beverages and tobacco 4.88 -0.01 2.90 0.66 21.41 Clothing and footwear 5.87 1.76 5.75 6.85 7.68 Housing 15.36 0.76 14.08 0.34 14.45 Household equipment 8.64 0.75 21.79 1.15 9.00 Health 3.25 0.30 19.30 0.22 13.07 Transport 15.49 2.56 28.39 3.30 6.69 Communication 4.64 0.56 8.07 1.47 2.98 Recreation and culture 3.01 -1.32 10.05 0.72 3.74 Education 2.28 0.60 10.57 0.28 11.19 Restaurants and hotels 5.91 0.95 17.73 0.16 10.94 Miscellaneous goods and services 4.73 1.62 17.92 1.92 20.86 CPI Source: TURKSTAT. Table 3. D-PPI and Subcategories (% Change) Weight May 2021 May 2020 Monthly Annual Monthly Annual 100 3.92 38.33 1.54 5.53 Mining 3.51 2.76 32.88 -1.74 3.63 Manufacturing 87.27 3.94 41.27 1.62 4.98 Manufacturing excl. petroleum products 83.46 3.73 38.07 1.54 7.79 Manufacturing excl. petroleum products and base metals 75.28 3.10 32.80 1.57 8.50 D-PPI Electricity, gas, steam and air-conditioning sup. 8.38 4.55 6.64 2.46 14.49 Water supply 0.85 0.47 29.72 -0.61 6.61 Intermediate Goods 5.20 47.76 1.52 6.09 Durable Consumption Goods 2.40 29.18 2.44 14.90 1.99 29.28 2.06 12.28 Non-Durable Consumption Goods 1.65 25.22 1.45 9.01 Capital Goods 3.14 29.49 1.34 10.27 Energy 5.17 43.33 1.73 -11.92 D-PPI (MIGs Classification) Durable Consumption Goods (Excl. Jewelry) Source: TURKSTAT.