Page 45 - TURKRptMay19

strongman president will be able to stomach the results as they stand from the weekend local elections. There was little appetite to discuss anything else but the day also brought the latest inflation news for their recession-beset nation, so first things first.
Turkey’s official annual consumer price index (CPI) inflation very slightly edged up to 19.71% in March from 19.67% y/y in February , the Turkish Statistical Institute (TUIK) announced. Bloomberg saw the headline figure as in parallel with its surveyed expectations while Reuters reported that it was worse than what its respondents expected.
The official inflation data for March also showed a 2.44% m/m rise in food prices , which have the biggest weight in the CPI basket at 23.29%. Consequently, food inflation officially rose from 29.25% y/y in February to 29.77% in the third month.It was notable that annual inflation given for alcoholic beverages and tobacco—which have just a 4.23% weight in the basket—remained stuck at 2.71% despite tax hikes.
For the second month running, the biggest inflation increase was recorded for healthcare prices , with 3.48% given as the March figure. Healthcare prices have the second lowest weight, of 2.58%, in the inflation basket. Official annual healthcare prices thus rose at a rate of 19.72% in March compared to 17.89% in February. The health ministry last month hiked the fixed exchange rate for imported pharmaceutical products by 26.4%.
In March, the average prices of 33 items in TUIK’s inflation basket of 418 items remained unchanged while those of 270 items increased and those of 115 items decreased. It is notable that official figures have pointed to widespread rises in CPI basket item prices while the impacts have not been felt in the headline inflation figure.
Seker Invest’s below-consensus inflation estimate basically depends on its expectation of a greater GDP slowdown/contraction for 2019 at 2.0% and it assumes a stabilisation of the TRY. Its estimate also assumes that food inflation will be roughly 14-15% by year-end (the central bank expects 13%).
Turkish inflation to gradually decelerate central bank chief tells IMF spring meeting. Turkey’s Central Bank governor Murat Cetinkaya expects price growth to gradually decelerate because core inflation measures are already evidencing a slowdown, according to his presentation at the International Monetary Fund (IMF) spring meeting in Washington that was published by the central bank.
The IMF’s latest World Economic Outlook sees average consumer price growth in Turkey slowing to 17.5% in 2019 and to 14.1% next year.
Cigarette price hike set to add point to Turkish inflation. A 20% price increase on cigarettes introduced in Turkey is set to add up to a percentage point to the country’s inflation rate. The Turkish government hiked its special consumption tax on cigarettes in January to 67% from 63%, while at the same time lowering the minimum fixed tax to zero. Partly in response to the tax increase, tobacco companies raised their prices over the weekend. Prior to the move, the TUIK Turkish statistical institute listed the average price for a pack of cigarettes as 11.2 lira ($1.98). Cigarettes and tobacco products, along with alcoholic beverages, represent 4.23% of the inflation basket formulation used by TUIK.
45 TURKEY Country Report May 2019 www.intellinews.com