Economic studies conducted for Türkiye highlight the significance of the month of Ramadan on production and prices.[1] In this blog post, we present a detailed analysis on the impact of Ramadan on food prices, which have an influential role in price stability, using macro data as well as high-frequency micro data.
The analyses we carried out on monthly inflation for the 2003-2024 period for food and non-alcoholic beverages in general and for processed and unprocessed food in particular reveal that Ramadan has different effects on food inflation items. In addition to its simultaneous effects, Ramadan has leading and lagging effects on monthly inflation in food and non-alcoholic beverages, and in unprocessed food, whereas it has no significant effect on monthly processed food inflation. Therefore, consistent with previous studies and field observations, our findings imply that the upward price pressure on the food and non-alcoholic beverages category during Ramadan is mainly driven by unprocessed food products (Chart 1).[2]
For analyzing the impact of Ramadan on unprocessed food prices in detail, we use data from the Ministry of Agriculture and Forestry's Agricultural Products Price Monitoring System (TÜFİS). TÜFİS includes daily price data coming from chain markets and local markets that hold a significant share in the food retail sector. Special identification codes assigned by TÜFİS for each product enable us to track prices at both the product and market levels. Below are the 15-day price indices we constructed for selected unprocessed food products using TÜFİS daily data from 2022 to 2024, with the first 15 days of Ramadan indexed as 100.[3]
These micro-level price data point to Ramadan-specific divergences in the price dynamics of selected unprocessed food items.[4] Notably, the uptrend in red meat and chicken meat prices that began prior to Ramadan accelerated during the month of Ramadan and followed a relatively mild course thereafter (Charts 2 and 3). Prices of pulses rose during Ramadan but remained relatively flat before and after (Chart 4). Egg prices, on the other hand, posted an increase starting from Ramadan and a decline afterward (Chart 5). It is noteworthy that Ramadan-related price increases tend to become permanent for all products analyzed.
Therefore, both the model and the high-frequency data analysis reveal that Ramadan had an impact on food and non-alcoholic beverages prices in general, and unprocessed food prices in particular. According to our calculations using the coefficients given in Chart 1, Ramadan had an upward impact of 1.16 and 3.53 points on unprocessed food inflation and 0.75 and 1.09 points on food inflation in February and March of 2025, respectively (Charts 6 and 7). Accordingly, we have calculated the food-driven direct impact of Ramadan on headline inflation to be approximately 0.5 points in 2025.
To sum up, the findings of our detailed and up-to-date analyses indicate that there is an upward pressure on food prices during Ramadan, primarily driven by unprocessed food items. In this regard, we assess that the Ramadan effect contributed to the notable price increases in food prices observed in March 2025.
[1] See Atabek, A. (2010), Özmen, U. and Sarıkaya Ç. (2014).
[2] Atabek (2010) defines the Ramadan variable as the ratio of the number of Ramadan days to the length of the respective month in which Ramadan fell. For this study, departing from the Atabek (2010) approach, we modeled monthly food inflation for food and non-alcoholic beverages as well as processed and unprocessed food inflation using the February 2003-December 2024 data in accordance with Gomez and Maravall’s (1996) TRAMO-SEATS method. We interpolated the Ramadan variable to these models as a calendar variable and tested its statistical significance. The figures in Chart 1 show the coefficient estimates of the Ramadan variable in the relevant models.
[3] We have selected the unprocessed food products for which the Ramadan effect on monthly price developments was found statistically significant as per our analyses. The fresh fruits and vegetables group, one of the important unprocessed food items, is not included in the results as it is highly dependent on seasonality and has no significant Ramadan effect.
[4] TÜFİS data are compiled from field observations in 81 provinces on a daily basis by provinces/districts, markets, and products.
References
Atabek, A. (2010). Ramazan Ayının Üretim Üzerindeki Etkisi [The Effect of Month of Ramadan on Industrial Production] (in Turkish). CBRT Research Notes in Economics No. 10/14.
Gomez V., and Maravall, A. (1996). Programs TRAMO (Time Series Regression with ARIMA Noise, Missing Observations and Outliers) and SEATS (Signal Extraction in ARIMA Time Series). Instruction for the user, Working Paper 9628, Bank of Spain, Madrid.
Özmen, U., and Sarıkaya Ç. (2014). Enflasyonda Ramazan Etkisi [Ramadan Effect on Inflation] (in Turkish). CBRT Research Notes in Economics No. 14/14.