By being simple, transparent and easily accessible, prices on futures markets generally serve as a good starting point for forecasting oil prices, yet it is safe to say that forecasts made using a proper combination of different methods give more reasonable results.
Industrial metal prices are determined by supply and demand factors in the medium and long term while financial conditions and the risk appetite have a decisive role in metal price movements in the short term.
The cost of raising the inflation target would most probably override its benefits. Moreover, although the likelihood of advanced country central banks hitting the zero lower bound problem is high, it will not be easy for them to abandon this policy that they have built up over a long time.
The methodological change in the weight structure of seasonal products is likely to cause fluctuations in core inflation via clothing and footwear prices. Therefore, in order to be able to make a healthy evaluation of the underlying trend of inflation, it would be wise to take into account the indicators adjusted for these effects for 2017 as it is a transition year.
Producer prices are an indicator for capturing cost-side pressures on consumer prices. but the difference between the rates of increase in these series grows in favor of producer prices during periods of import cost shocks. Accordingly, it is natural that there was a divergence between D-PPI and CPI in 2017 when oil prices and exchange rates displayed significant movements.
A considerable proportion of wage and salary employees in Turkey earn wages at and around the minimum wage, and minimum wage rates and the CPI serve as an anchor for wage increases in the private sector. This mechanism limits the sensitivity of wages to business cycles across the economy, leading to a significant rigidity in wage inflation and feeding into inflation rigidity in terms of the interaction between wages and inflation.
The pricing dynamics of core goods and services groups – the two main components of core inflation – are very different. For a sound analysis of core inflation, we should hear the tales of these two groups individually.
In Turkey, exogenous factors such as exchange rates and import prices have a significant impact on inflation. Estimates of pass-through from exchange rates and import prices to inflation allow us to make quite clear policy inferences as they contain no significant uncertainty. Nevertheless, pass-through from economic activity and wages to inflation contains a wider uncertainty band.
A holistic approach incorporating joint efforts of all stakeholders in the disinflation process can ease the policy trade-offs and thus make a significant contribution to achievement of lasting price stability at lower costs.
Yusuf Emre Akgündüz,Yusuf Kenan Bağır,Huzeyfe Torun,Altan Aldan
Recently, productivity gains have continued, while real wages have registered a decline. The impact of the changes in composition of employment and production structure is limited in these developments. The surge in productivity in the industrial sector is a favorable sign for inflation and growth dynamics.
Ali Hakan Kara,Fethi Öğünç,Çağrı Sarıkaya,Mustafa Utku Özmen
The degree of exchange rate pass-through to inflation may vary depending on the economic environment. Currently, the weak economic activity is limiting the exchange rate pass-through, whereas the behavior of exchange rate expectations pose upward risks.