Turkey’s inflation data for April is a double-edged sword in parsing the Turkish economy. Month-on-month figures show a bit of reprieve from persistent inflation. CPI increased 3.0% for the country since March. As a consequence, the annual inflation rate decreased modestly from 38.1% to 37.9%. These statistics suggest that inflation pressures may be stabilizing despite ongoing challenges in various sectors.
In April 2024, Turkey’s overall inflation rate was a staggering 3.2% per day! That’s a significant jump from last month, reinforcing a third straight month of increase. Put another way, the five-year average for Turkey’s 2003-based index for the month of April is a high 3.1%. This reliable bottom line provides a crucial context for assessing today’s numbers.
Core inflation, which excludes more volatile items such as food and energy, increased by 3.3% from the prior month. That brought down the annual core inflation rate to 37.1%. Core inflation figures have made some marginally encouraging improvements. That provides a unique ray of hope to policymakers seeking to help alleviate the impact of skyrocketing cost of living.
Food inflation played the largest role in driving all-items inflation down, especially on a monthly basis. Together, they contributed 0.51 ppt to the overall inflation figure. The housing sector was the biggest mover by contributing the most at 0.74 percentage points added. This increase was mainly due to a major 25% increase in residential electricity rates. Transportation had a big impact, adding 0.57 ppt to the overall inflation jump.
Despite these pressures, other parts of the economy showed astonishing strength. Annual inflation for that same subset remained modest at 16.9%. This means that regions around the country are being impacted by different amounts of price oscillation. Turkey’s Services inflation has consistently decreased, reflecting some resilience in this sector during a period of overall economic volatility.
The month-over-month increase in the Producer Price Index (PPI) was an impressive 2.8%. The increased demand was largely driven by escalating expenses in food items, garments, and metals. The annual rate of change on PPI fell sharply from 33.3% y/y to 22.5% y/y. This decline prompts an expectation of easing in month-over-month producer price growth seen earlier this summer. Goods inflation ticked up to a 30.8% YoY pace, with core goods inflation at a 20.3% YoY rate.
And just like that, housing inflation began to cool. It fell to 54.6% YoY, which is the lowest rate since the summer of 2022. This overall decline may be an early indicator that the housing market is leveling off. It’s a move that will help those consumers most affected by the soaring cost of living.
In short, Turkey’s inflation numbers for April tell an ambiguous story. The threat of monthly increases continues to test consumers and policymakers. A few signs suggest inflation could be cooling after a choppy stretch. These developments may shape future monetary policy decisions as Turkey continues to find its footing in the new economic paradigm.