True improvement vs. lockdown noise?

TURKEY - Report 04 May 2020 by Murat Ucer

Consumer prices rose by 0.85%, m/m, somewhat higher than the market consensus, with the 12-month CPI inflation easing to 10.9% from 11.9% in March. Domestic-PPI inflation registered 1.3%, m/m, increase, leading to a decline in the 12-month rate to 6.7%, from 8.5% in the previous month.

The worse-than-expected headline owes to sharper-than-expected food inflation (2.5%, m/m), which contributed 0.61 pps to headline CPI inflation, higher than last April’s 0.35 pps. The 12-month food inflation hence increased further to 11.3% from 10.1% in March, with processed food inflation continuing to rise from already elevated levels. As an aside, price increases in textile and clothing category were markedly below historic averages a second year in a row, helping to contain core good inflation.

All in all, today’s print, aside from food inflation, is encouraging, but we need to be extra careful in reading too much into these numbers nowadays, because of the noise associated with the partial (and in some days full) lockdown that has been prevailing in the country.

Now read on...

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