October CPI: A dragon with nine lives

Turkish Economy: October CPI

A dragon with nine lives

CPI increased by 2,08% MoM above market expectation of an 1,70% increase. Annual CPI inflation accelerated to 11,9%. PPI inflation surprised to the upside by rising 1,71% MoM – significantly above its historic average of 0,78% and market expectation of 0,60%. Annual PPI inflation increased to 17,3%. In tandem with PPI inflation, core inflation reached 11,82% YoY – highest since 2004 (Figure).

In quarterly terms the index rose by 1,4% QoQ (seasonally and working day adjusted).

Key Take-aways:

  • As signaled by the central bank during inflation report October CPI surprised to the upside.
  • Forecast path seems intact with PPI inflation peaking this month and CPI peaking next.
  • Nevertheless level of the future inflation path has increased by about 1 full percentage point, may close the year in double-digits.
  • Central bank aims to reach January 3rd when the December inflation reports comes out with a lower reading.
  • «Decisive» tightness of the monetary policy to be felt only after March when inflation persists in single digits.

Source: Bloomberg