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Price Developments Reports are published within one working day, following the announcement of price statistics by the Turkish Statistical Institute (TurkStat).  Price Developments, which include CBRT’s initial remarks on the inflation figures of the previous month, aim to contribute to a sounder interpretation by the public of the monthly inflation developments during the period between the announcement of the official price statistics and the Monetary Policy Committee (MPC) meeting.

According to the latest report, in January,unprocessed food inflation plunged in this period, while annual energy inflation declined due to the base effect, despite soaring electricity prices. Influenced by the ongoing cumulative exchange rate effects, annual inflation in the core goods group remained on the rise due to clothing prices. Services inflation, on the other hand, lost some pace. All in all, both annual inflation and the underlying trend in core indicators remained high.

In January, consumer prices rose by 1.02 percent and annual inflation was receded by 1.57 points to 10.35 percent. The annual rate of change in the B index remained relatively flat at 12.31 percent, while that in the C index[1] inched down by 0.12 points to 12.18 percent. An analysis of the contribution of subcategories to annual inflation reveals an overall month-on-month decline for all groups. The food, alcohol-tobacco-gold, and energy groups contributed 1.01, 0.22 and 0.15 points less to annual inflation, and the contribution of services and core goods to annual inflation fell by 0.1 points each.

Three-month averages of seasonally-adjusted core inflation indicators show that the underlying trend decreased slightly. The underlying trend in services exhibited a slight increase, but receded in core goods in January. All in all, the underlying trend in core inflation indicators remained high.

Domestic producer prices rose by 0.99 percent in January, while annual PPI inflation was down by 3.33 points to 12.14 percent amid base effects. Producer prices were driven up by higher commodity prices, particularly for oil and metals, regardless of
moderate exchange rate changes. Base effects pulled annual inflation down to 14.13 and 12.30 percent in the manufacturing industry and the manufacturing industry excluding base metals and oil, respectively. The seasonally adjusted underlying
trend of manufacturing industry prices excluding oil and base metals posted a small decline.

January 2018 Price Developments

[1] B and C indices, among special indicators, which are newly-released by the TURKSTAT, are the successors of the H and I indices released before 2017. D index is the CPI excluding unprocessed food, alcoholic beverages and tobacco products.

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* The views expressed here are those of the authors. They do not necessarily reflect the official views of the Central Bank of the Republic of Turkey.

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