CBRT’s emphasis on ‘energy prices’ in inflation

While the Central Bank stated that there were high increases in energy prices in June monthly inflation, it said: “The increase in energy group prices was driven by the increase in the fuel element due to the evolution of the rate exchange”.

After the Turkish Statistical Institute (TÜİK) announced that the Consumer Price Index (CPI) increased by 3.92% and reached 38.21% in June, the CBRT Price Evolution Report was also published .

According to the report, annual inflation decreased in the energy and services groups in this period, while it increased in other groups.

When analyzed monthly, large increases were recorded in all subgroups, especially energy. The increase in the prices of the energy group was driven by the increase in the fuel item due to the evolution of the exchange rate.

The increase in basic goods inflation was driven by durable goods with a high exchange rate pass-through, while the monthly increase in the prices of services weakened compared to the previous month, but remained strong, especially in rents . Food prices rose above the historical average for June, led by the group of fresh fruits and vegetables.

Although producer prices showed the highest monthly increase in the last eight months due to the evolution of the exchange rate, the monthly rate of increase in indicators B and C increased compared to the previous month, according to seasonally adjusted data. While annual inflation decreased in indicator B, it increased in indicator C.

SERVICE PRICES INCREASE 3.66 PERCENT IN JUNE

In June, consumer prices increased 3.92 percent, while annual inflation decreased 1.38 points to 38.21 percent. The annual variation rate became 46.63 percent with a decrease of 1.07 points in the B index, and 47.33 percent with an increase of 0.71 points in the C index.

When the contributions of the subgroups to annual consumer inflation are analyzed, it is observed that the contributions of the groups energy, services, food and non-alcoholic beverages decreased by 1.76, 0.17 and 0.08 points, respectively, and the contributions of the alcohol-tobacco group – The gold and basic goods groups decreased 0.31 points, respectively, and increased 0.32 points.

When analyzing with seasonally adjusted data, the monthly increases increased slightly in the B and C indices compared to the previous month. While price increases strengthened in basic goods and processed foods, which are among the groups that make up the B index, compared to the previous month, they slowed somewhat in the services group. Services prices rose 3.66 percent in June, while the group’s annual inflation fell 0.50 points to 59.45 percent.

In this period, annual inflation decreased in all subgroups except income.

The increase in monthly rents was 5.80 percent, maintaining its high trajectory also in this period, and the group’s annual inflation reached 75.91 percent.

In the restaurant-hotel subgroup, monthly inflation maintained its high perspective with 4.32 percent. While price increases slowed somewhat in food services compared to the previous month, they remained strong in lodging services due to strong tourism performance.

With this development, the annual inflation of the restaurant-hotel group fell by 1.76 points to 67.22 percent.

Although the increases in communications prices continued to be led by internet rates, in the subgroup of other services, the increases in the maintenance and repair of personal transport vehicles and entertainment and sports services stood out. On the other hand, the continuous increase in prices in the category of passenger transport by air was the determining factor in the perspectives of transport services.

INCREASED INFLATION OF BASIC GOODS

According to the report, the annual inflation of basic goods increased by 1.62 points to 36.69 percent. In June, annual inflation increased in the subgroups of durable goods, clothing and footwear, while it decreased in other basic goods. In the subgroup of durable goods (excluding gold), prices increased 6.64 percent from the previous month, while annual inflation rose 4.03 percentage points to 43.30 percent.

In addition to the evolution of the exchange rate, the high increase in car prices due to the dynamic internal sales, with 10.28 percent, was the main driver of the evolution of inflation in the subgroup in June.

Price increases in home appliances and furniture rose 3.78 percent and 1.47 percent, respectively, in June, but had a more subdued outlook compared with autos.

Prices in the subgroup of other basic goods registered a relatively moderate increase of 1.95 percent.

In this period, in addition to the materials for the maintenance and repair of the house, cleaning materials related to the house stood out in the monthly evolution of prices. As clothing and footwear prices rose 1.37 percent, annual inflation in the subgroup rose 1.53 points to 20.04 percent.

While energy prices increased 4.23 percent in June, the group’s annual inflation decreased 9.55 points to 16.52 percent due to the base effect. In this period, fuel prices stood out with 11.32 percent in line with the perspective of the Turkish lira in the group’s monthly price increase, while bottled gas increased by 2.59 percent and running water 1.10 percent.

– Processed foods decreased 7.99 points to 43.36 percent.

Food and non-alcoholic beverage prices rose 3.02 percent in June, while annual inflation rose 1.40 points to 53.92 percent. The annual inflation of unprocessed foods increased 12.43 points to 68.44 percent, while that of processed foods decreased 7.99 points to 43.36 percent.

The seasonally adjusted data indicated that the prices of fresh fruits and vegetables, especially vegetables, showed a significant increase. In the group of other unprocessed foods, the rise in the prices of red meat continued.

Tea prices, which increased due to fresh tea purchase prices, stood out among the sub-items.

The monthly inflation of bread and cereals increased 1.41 percent in this period. The prices of the group of alcoholic beverages and tobacco products increased 11.13 percent, while annual inflation increased 10.80 points to 40.90 percent.

This development was driven by increases in the prices of tobacco products by 12.29 percent, coming from the producing company.

Domestic producer prices increased significantly by 6.50 percent compared to the last three months. On the other hand, the annual inflation of this group decreased 0.34 points to 40.42 percent due to the base effect.

In June, the international prices of raw materials fell slightly, while the evolution of the exchange rate was the main determinant of the increase in producer prices.

Analyzing by main industrial groups, annual inflation decreased in durable and non-durable consumer goods, while it increased in other subgroups.

When analyzing the monthly evolution of prices according to the sectors, it is observed that the increases are generalized, while refined petroleum products, metallic minerals, gas manufacturing, tobacco products, motor vehicles and metals and related groups stand out with price increases. (AA)