December CPI:"Today’s The Day!"

Turkish Economy: December CPI

Today’s The Day!

CPI increased by 0,69% MoM quite in line with market expectations. Annual CPI inflation slowed down to 11,92%. In tandem with CPI inflation PPI inflation decelerated by rising only 1,37% MoM – mean-reverting to its historic average of 0,78% MoM. Annual PPI inflation reads 15,5%. Core inflation yet to slow down at 12,30% YoY.

Key Take-aways:

  • Long awaited decline in inflation metrics have started.
  • Path will play a more important role next year (Figure):
    • Q1: Dis-inflationary trend to start the year,
    • Q2 through Q3: Flat trend, and
    • Q4: Dis-inflationary trend, again to finish the year.
  • Characteristically, December is a low inflation month, due to year end sales. In January new year price adjustments take place pushing CPI higher again. Expect a higher monthly reading next month albeit helping the dis-inflationary trend in annual figures.
  • Going forward, central bank’s «decisive» approach will help real rates become stronger and more visible as inflation decelerates down the road.