Turkey’s monthly inflation figure has come out at 1.0%. That’s below the consensus call of 1.6% and our 1.4% call. Annual inflation in 2024 turned out to be 44.4% YoY (vs the CBT forecast in the latest inflation report of 44%), and that’s a drop from 47.1% a month ago. While there was an increase of 2.9% in December 2023, the average of December months of the 2003-based index for the last ten years was 1.0%, indicating that the base effect was favourable for this year.
PPI stood at 0.4% MoM, showing a drop to 28.5% YoY versus a month ago, driven by utility prices. The data implies a notable weakening in cost pressures in the second half of last year, which is also attributable to supportive currency developments, global commodity prices, and particularly oil prices in the current geopolitical backdrop, which will likely remain the key determinant of the PPI trend in the period ahead.
Core inflation (CPI-C) came in at 1.1% MoM, the lowest monthly reading since the second half of 2021, moving down to 45.3% on an annual basis, supported by the relatively slow-moving FX basket and increasingly benign PPI outlook. Going forward, pricing behaviour and inertia in services have remained key risk factors for the pace of the current disinflation process. The TurkStat will release seasonally adjusted (sa) headline CPI and core indicators on Monday. An early analysis reveals that the underlying trend, which the central bank monitors closely, seems to have improved significantly in December for headline and core inflation.
