Page 29 - TURKRptSept19

4.2.1 CPI dynamics
Discounts in the value added and special consumption taxes on white goods, furniture and automotives ended on June 30.
Adding to the price pressures, consumer electricity tariffs were hiked by 15% as of July 1.
There is considerable scepticism as to whether Turkey’s TUIK national statistical agency is putting out an accurate inflation gauge.
Cigarette prices rise sharply in Turkey. British American Tobacco (BAT) and Philip Morris International (PMI) increased the prices of cigarettes they sell in Turkey by from Turkish lira (TRY) 1 to TRY 3. Cigarette prices make up 3.87% of the inflation basket, according to statistics office TUIK. The price of a pack of Marlboro was hiked to TRY18 (€2.9) from TRY15 effective August 4. The price of the cheapest brand cigarette BTA sells has increased to TRY14 from TRY11. Some tobacco shops removed these brands from their shelves before the new prices were announced so that they could bide their time in order to make a larger profit. They sold products they bought at the old, cheaper prices from the cigarette companies, kept them their inventories and then picked up the extra margin from sales mead following the price hike. The impact of the cigarette price hikes on inflation will be seen in August.
The Turkish state energy company Botas hiked natural gas prices by an average of 14.97% for residential users, effective August 1. In its inflation report released last month, the Central Bank calculated that the price hike in natural gas would push up inflation by around 1.2 percentage points.
The government is facing a dilemma. Its budget deficit is rising as slower economic growth hits revenues and tax collection but at the same time it wants to revive economic activity by lowering interest rates. It argues that the improvement in the inflation outlook provides room for further rate cuts.
Cenk Angin, the general manager of tatilbudur.com, an online booking company, said in August that hotel prices and other travel costs increased 40-50% this year.
The Central Bank recently cut its inflation forecast for 2019 to 13.9% from 14.6%.
29 TURKEY Country Report September 2019 www.intellinews.com