CBRT: Inflation Composition Emerges as a Key Focus in October

Forex - The Central Bank reported that the composition of inflation emerged as a noteworthy element in October. The Central Bank of the Republic of Turkey (CBRT) published its assessment of "Monthly Price Developments."

In the assessment, it was stated: "Consumer prices increased by 2.88% in October, bringing annual inflation down by 0.80 points to 48.58%. While annual inflation rose in food and essential goods categories, it decreased in other main groups. The inflation composition in October stands out as an aspect that requires attention. During this period, unprocessed food prices, significantly influenced by temporary supply conditions and relatively outside the impact area of monetary policy, recorded a strong increase, particularly due to fresh fruits and vegetables. Indeed, food inflation excluding fresh fruits and vegetables remained at a lower monthly rate of 1.29%. In categories where the effects of monetary policy are more felt, such as essential goods and some demand-sensitive service items, a more moderate outlook is observed. In this respect, the level of headline inflation does not completely reflect this correction in the composition, while on the other hand, core trend indicators provide a clearer view. The monthly price increase in the essential goods group has risen compared to the previous month due to seasonal effects observed in the clothing and footwear subgroup, while the monthly inflation rates of other subgroups have slowed down. Indeed, when seasonal effects are removed, it has been observed that core goods inflation has declined compared to September. During this period, the monthly increase in seasonally adjusted service prices has also slowed down. This development has been influenced by the weakness recorded in the rent and restaurant-hotel groups, as well as the completion of relative price adjustments in education-related services. While the monthly increase in producer prices has maintained a moderate trend, annual producer inflation has continued its downward trend. Under this view, a slowdown has been recorded in core trend indicators with seasonally adjusted data."