June inflation worse than expected

TURKEY - In Brief 03 Jul 2014 by Murat Ucer
Today's June inflation print disappointed, coming in at 0.3% worse than the consensus expectation of a flat reading -- and our somewhat more optimistic forecast of a slightly negative reading. But the culprit, as far as our forecast is concerned, is food prices: we expected, in line with seasonally averages (and despite Ramadan), a negative reading in food prices in June, like by about a percentage point drop, but they rose instead by 0.4% (food&beverages). That being said, it is all about headlines these days, and this is not a good headline print -- the 12-month CPI inflation has peaked and dropped alright, but the drop is a lot less significant than what the market -- and probably CBRT, too -- was expecting. Then again, this is unlikely to change the CBRT's working rule these days: keep cutting as long as the lira permits it... We shall write a bit more detailed note with usual graphs and tables during the day today.

Now read on...

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