After the Turkish Statistical Institute (TUIK) announced that the Consumer Price Index (CPI) increased by 0.85 percent in April and the annual inflation decreased by 0.92 points to 10.94 percent, the Central Bank of the Republic of Turkey (CBRT) announced that “April “Price Developments Report” was also published.
According to the report, while annual inflation decreased in subgroups other than food in this period, the most significant contribution to the slowdown in inflation came from the energy group.
Food prices increased at a high rate compared to their seasonal trend for both unprocessed and processed products. The downward trend in energy prices continued with the reflection of the sharp decline in international oil prices. Services inflation decreased across subgroups, especially in items where activity was interrupted due to the epidemic. During this period, core goods group inflation slowed down despite the depreciation of the Turkish lira.
Under this outlook, annual inflation and trend of indicators B and C decreased.
“There was a slowdown in core goods inflation”
When the contributions of subgroups to annual consumer inflation are examined, the contribution of the food group increased by 0.29 points compared to the previous month, while the contributions of the energy, services, basic goods and alcohol-tobacco-gold groups were 0.78, 0.21, 0.11 and 0, respectively. decreased by .11 points.
According to seasonally adjusted data and 3-month averages, the trend of indicators B and C decreased. In this period, while the trend in the tax-adjusted core goods group slowed down, the decline in the trend in the services group was more pronounced.
While service prices increased by 0.22 percent in April, annual inflation decreased by 0.66 points to 11.76 percent. During this period, annual inflation decreased in all subgroups. The most significant slowdown was observed in sectors whose activities were interrupted due to the epidemic, such as restaurants-hotels and transportation. As a matter of fact, the flat course in some items for which it is not possible to compile prices, such as air passenger transportation, entertainment-culture, package tours, hairdressers and barbers, was also effective in the slowdown in services inflation.
While the decline in telephone call fees stood out in the monthly price decrease in communication services, a slowdown was recorded in the rate of increase in rents when adjusted for seasonal effects. On the other hand, prices for maintenance-repair services, which are highly sensitive to exchange rates, increased at a high rate during this period.
Annual inflation in the core goods group decreased by 0.30 points to 7.88 percent in April. During this period, annual inflation followed a near-horizontal course in the durable goods group, while it declined in other subgroups. Durable goods group prices increased by 2.05 percent in April, and this development was determined by the increases in automobile (3.38 percent) and furniture (3.63 percent) prices. In the clothing and shoes group, where the effect of the new season is monitored, the price increase in April was quite low compared to historical averages. The impact of epidemic-related factors was felt especially in the shoe group. In summary, despite the negative effects of the depreciation of the Turkish lira on certain items, there was a slowdown in core goods inflation in general, depending on demand conditions.
“Annual inflation increased to 17.78 percent in processed food”
Energy prices decreased by 4.99 percent in April. The decline in international oil prices was effective in the decline in energy prices. Despite the depreciation in the Turkish lira, fuel oil and bottled gas prices fell by 12.82 percent and 11.50 percent, respectively, in April. Additionally, network water prices, the price of which is determined by municipalities, also decreased during this period (minus 1.63 percent).
As a result of these developments, annual energy inflation decreased by 6.51 points to 3.30 percent. Annual inflation of food and non-alcoholic beverages increased by 1.23 points to 11.28 percent in April. Annual inflation rose to 5.23 percent in unprocessed food and 17.78 percent in processed food. Seasonally adjusted data indicated a high increase in unprocessed food prices for both fresh fruits and vegetables and other groups. Although general increases were observed in other unprocessed food groups, prices of pulses (7.54 percent) and red meat (4.30 percent) attracted attention in particular.
In April, developments in bread-cereals, fats-oils and non-alcoholic beverages came to the fore in the acceleration of the increase in processed food prices. With these developments, annual inflation in the food group excluding fresh fruits and vegetables remained flat at 15.23 percent.
In summary, many factors such as the impact of epidemic-related measures on supply conditions, the strong demand increase specific to the period, tax adjustments and exchange rate developments were evaluated as determining factors in food price developments in April.
PPI
While domestic producer prices increased by 1.28 percent in April, annual inflation decreased by 1.79 points to 6.71 percent due to the effect of the high base in the same period of the previous year.
The epidemic-induced decline in international commodity prices continued during this period. However, due to the depreciation in the Turkish lira, the main trend of manufacturing industry prices, excluding oil and basic metals, increased.
When analyzed by main industrial groups, annual inflation decreased in durable and non-durable consumer goods, especially in the energy group, while it increased in other groups. While energy prices decreased significantly on a monthly basis, high price increases were recorded in other subgroups.
Refined petroleum products and crude oil were the determining factors in the decline in energy producer prices. While the increase in intermediate goods group prices spread across sub-items, developments in iron-steel, textile-related sub-items and paper products came to the fore. In capital goods, price increases in metal construction products, motor vehicles, parts and accessories and machinery were effective. The price increase in non-durable consumer goods includes fats and oils, processed fresh fruits and vegetables and other textile products; Furniture, jewelery and household appliances came to the fore in durable consumer goods.
