In the Summary of the Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (PPK) Meeting, it was stated that the downward trend in medium-term inflation expectations continues to spread across the board, and “The fact that the expectation distribution includes an increasing consensus among survey participants indicates that the uncertainties regarding the medium-term inflation outlook have decreased significantly.” .” expressions were used.
The summary of the Monetary Policy Committee meeting on January 16 has been published. In the summary, it was reminded that annual inflation increased by 1.28 points in December 2019 and completed the year at 11.84 percent, slightly below the forecast presented in the October Inflation Report.
In the summary, it was stated that while annual inflation increased across subgroups in the said period, the increase in the services group was more limited. Although the annual inflation of core inflation indicators increased slightly, the moderate trend of B and C indicators was maintained.
In the summary, it was stated that the annual inflation of food and non-alcoholic beverages completed the year with a 2-point increase to 10.89 percent. In the summary, it was stated that the processed food group was more decisive in this increase, and the following was noted:
“While the price developments in dairy products came to the fore following the increases in raw milk purchase prices, it was observed that the upward trend in bread-cereal prices in recent months continued. While the increase in unprocessed food inflation was mainly due to the other unprocessed food group, the fresh vegetable and fruit group inflation remained at a low level with a limited increase. “Leading indicators signal that, despite the significant increases in vegetable prices, unprocessed food inflation may slow down in January due to the base effect.”
“The improvement in inflation expectations continues”
In the summary, it was stated that the increases in bottled gas and fuel prices due to the rise in oil prices and recent exchange rate developments were decisive in the annual inflation of the energy group, which increased by 3.64 points to 10.98 percent due to the base effect.
In the summary, it was stated that the decline observed in the Esel mobile application and network water prices in fuel products limited a more negative outlook in group inflation, and added: “It should be noted that the annual inflation in the energy group will increase significantly in January due to base effects.” statements were included.
In the summary, it was reminded that service prices increased by 0.37 percent last month, and the group’s annual inflation increased by 0.14 points to 12.30 percent. It was noted that during this period, while annual inflation increased slightly in communication and other services groups, it decreased in transportation services and remained close to horizontal in restaurants-hotels and rental groups.
In the summary, which emphasized that the main trend in service prices decreased to a limited extent, the following evaluations were included:
“It is anticipated that real unit labor costs, tourism demand and past inflation indexation behavior will be effective in the course of service prices in the coming period, based on minimum wage developments. The improvement in inflation expectations continues. While the downward trend in medium-term inflation expectations continues to spread across the board, there is an increasing consensus among survey participants on the distribution of expectations.” This indicates that uncertainties regarding the medium-term inflation outlook have decreased significantly.”
“The increasing trend in industrial production will continue”
In the MPC summary, it was stated that the recent data indicate that the recovery trend in economic activity continues. The summary emphasized that the main trend in industrial production is stronger when excluding incidental movements in sectors with high historical volatility, and added: “Survey indicators and foreign trade data indicate that the increasing trend in industrial production will continue in December.” was expressed.
In the summary, it was stated that in the last quarter of 2019, the decrease in risk premium and exchange rate volatility and the improvement in financial conditions significantly supported domestic demand, and the following was noted:
“The improvement in the sectoral spread of economic activity continues. In the light of survey indicators such as the CBRT Business Tendency Survey, PMI and sectoral confidence indices, it is seen that the increase in manufacturing industry and service activities continues. Although investments continue their weak course, there is a recovery in investment and employment trends, including small and medium-sized companies. The Board emphasized the importance of growth and demand stability for the continuation of the improvement in the investment and employment outlook.
While the positive impact of improvements in competitiveness continues, the weakening of the global growth outlook partially slows down external demand. During this period, signals of slowdown increased slightly in the Middle East and North Africa region as well as in the European Union countries. On the other hand, market diversification flexibility and the strong course of tourism support the increase in exports of goods and services; However, an increase in imports is observed due to the recovery in domestic demand. In this context, the decline in the contribution of net exports to growth in the last quarter of the year; “The current account balance, which has recorded a significant improvement recently, is expected to follow a moderate course in the coming period with the contribution of the measures taken.”
In the summary, it is stated that the leading indicators signal that the partial improvement in unemployment rates continues, but the weak course in the labor market continues. “While the contribution of net exports to growth will decline in the coming period, it is anticipated that the recovery in the economy will continue with the disinflation process and the improvement in financial conditions.” statements were included.
Source: https://www.aa.com.tr/tr/ekonomi/orta-vadeli-enflation-beklentilerini-dusus-egilimi-suruyor/1711369
