Turkish inflation was 2.9% in October, higher than the market consensus of 2.5%. The annual figure, however, has maintained its declining trend and fell to 48.6% from 49.4% a month ago, given that favourable base effects (as it was 3.43% in October 2023) were more apparent in the second half of this year. Cumulative inflation in the first 10 months of the year reached 39.8%, exceeding the Central Bank of Turkey’s 38% forecast for the year (with a forecast range of 34-42%).
PPI stood at 1.3% month-on-month, reflecting a decrease to 32.2% year-on-year compared to the previous month. The data implies further moderation in cost pressures with supportive currency developments (USD/TRY up by slightly higher than 16% on a year-to-date basis). Global commodity prices, and particularly oil prices, in the current geopolitical backdrop will likely remain the key determinant of the PPI trend ahead.
Core inflation (CPI-C) came in at 2.8% MoM, moving down to 47.8% on an annual basis, supported by the relatively slow-moving FX basket and supportive base from the last year. While cost-push pressures are moderating as evidenced by the PPI data, pricing behaviour and inertia in services have remained key risk factors, for the pace of the current disinflation process.
