Markets will focus on next month’s inflation reading

ISTANBUL - Hürriyet Daily News

Inflation was up 1.03 percent in September on last month’s higher food prices. Hürriyet photo

Turkey’s inflation data for September were generally in line with market expectations, but the focus is on next month’s data, as recent price hikes in energy are expected to pull inflation up more, analysts have said.

Both consumer and producer inflation were up 1.03 percent compared with the previous month, the Turkish Statistical Institute (TÜİK) said yesterday. The market expectation for consumer inflation was 1.03 percent, but producer inflation was above expectations of 0.62 percent, according to Reuters.
“There was an expectation that inflation would fall sharply in October due to the base effect. But expectations are somewhat distorted by the latest price hikes. We will see the extent of this distortion with October’s inflation data,” Marbaş Securities Research Manager Serhan Yenigün told the Anatolia news agency.

Consumer inflation was up on last month’s higher food and transportation prices as well as a limited impact from Special Consumption Tax (SCT) hikes on liquor and fuel. But recent hikes in SCT, electricity and natural gas prices are expected to be reflected in the coming months.

“The year-end inflation rate may hit 7.4 percent due to price hikes in October and the rest of the year,” Reuters quoted Akbank economist Serdar Şenol as saying.

About one third of the 15-percent increase in SCT was reflected in liquor prices in September, Şenol said, adding that the effect of the higher SCT on automobile prices may be seen at the end of the year or at the beginning of 2013. Şenol said he does not expect the Central Bank to react sharply to new hikes in prices.

Compared with last September’s data, consumer inflation was up 9.19 percent and producer inflation was up 4.03 percent, the lowest since November 2009. As for 12-month averages, annual consumer inflation and producer inflation hit 9.53 percent and 8.35 percent, respectively. Liquor and tobacco recorded the highest price increases, at nearly 18.9 percent year-on-year in September.