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Home Business CBRT: Strong upward trend in producer prices continued

CBRT: Strong upward trend in producer prices continued

According to the Central Bank’s Monthly Price Developments Report, the strong upward trend in producer prices continued due to the rise in international commodity prices and the increasing supply restrictions in some sectors.

Turkey Statistics Institute (TSI) in February, the Consumer Price Index (CPI) increased 0.91 percent after 15.61 percent and annual inflation that month the Central Bank releases February Price Developments Report were published.

According to the report, the strong upward trend in producer prices continued due to the rise in international commodity prices and the increasing supply restrictions in some sectors. While annual inflation rose across subgroups, the most significant contribution to this increase came from core goods and food groups. During this period, prices in durable goods and other core goods followed a moderate course, with the effects of the cumulative exchange rate easing, while the annual inflation of clothing continued to rise.

While food inflation increased under the leadership of processed food prices, the ongoing reflections of the increase in raw milk purchase prices, meat prices and international agricultural commodity prices became prominent in this development. Despite the rise in international oil prices, the group’s annual inflation increased due to the low base, although energy prices showed a limited monthly increase as a result of exchange rate developments and the mobile scale application. During this period, annual services inflation increased slightly. Under this outlook, the annual inflation of B and C indicators increased, while their tendencies declined due to core goods.

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During this period, the annual rate of change of the B and C indices increased by 0.92 and 0.71 points, respectively, to 16.92 percent and 16.21 percent. When the contribution of subgroups to annual consumer inflation is analyzed, the contribution of core goods, food, energy and services increased by 0.30, 0.21, 0.11 and 0.05 points, respectively, compared to the previous month, while the contribution of the alcohol-tobacco-gold group was 0. Decreased by 03 points.

In 2021, the weights in the consumer inflation basket were updated. It is calculated that the weight update made in the consumer inflation basket in January had an upward effect on the inflation path by 0.4 points as of February. This effect is expected to gradually decrease after reaching 0.5 points in April and disappear by the end of the year. With seasonally adjusted data, the tendencies of B and C indicators decreased slightly, but remained high compared to the quarterly averages. During this period, the partial improvement in the core inflation trend stemmed from core goods, while the service trend remained nearly flat. High levels were maintained in the processed food trend.


According to the report, services prices rose by 1.04 percent in February, and the group’s annual inflation rose by 0.22 points to 11.74 percent. While communication and restaurant-hotel groups were effective in this increase, annual inflation fell in the transportation group, and it remained almost flat in rents and other services.

In this period, with the effect of the increase in the special communication tax from 7.5 percent to 10 percent, the inflation in communication services increased due to the mobile phone call and internet fee.

While catering services were determinant in the increase in the annual restaurant-hotel inflation, it was evaluated that the increase in food prices and minimum wage was effective in this development. On the other hand, low levels of inflation remained in this group on the accommodation services side. While the upward trend continued in the health and maintenance-repair group in the other services group, items such as insurance, package tours, entertainment-culture and education with low inflation during the epidemic period limited a more negative outlook.


According to the report, core goods prices fell by 0.12 percent in February, and the group’s annual inflation increased by 1.52 points to 21.70 percent (Chart 5). Annual inflation increased in clothing, footwear and durable goods, while remaining flat in other core goods.

Due to the limited seasonal discount in clothing and footwear compared to last year, annual inflation rose by 4.27 points to 6.18 percent, which was the main driver driving core goods inflation upward.

In durable consumer goods, whose annual inflation was high due to demand-side effects as well as international commodity prices and supply-side constraints, price increases were observed to have slowed down considerably as the effects of the exchange rate subsided. In February, there was a moderate price increase of 0.25 percent in durable consumer goods excluding gold, while annual inflation increased by 0.73 points to 34.28 percent due to the low base. Prices in other core goods fell 0.19 percent, while annual inflation remained flat.

According to the report, which stated that drug prices, which increased by 6.09 percent monthly, prevented a more positive outlook, depending on the reference price application, “It should be noted that some of the increase in drug prices will be reflected in March figures. expression was used.


Energy prices rose 0.25 percent in February. Natural gas and tap water prices rose by 0.80 percent and 0.59 percent, respectively, during this period. Despite the rise in oil prices in February, the increase in fuel prices remained limited to 0.16 percent due to the appreciation in the Turkish lira and the mobile application of the scale. With these developments, the energy group’s annual inflation rose by 0.96 points to 8.82 percent due to the low base effect of the declining oil prices in the same period of the previous year.

Food and non-alcoholic beverage prices rose by 2.57 percent in February, and the group’s annual inflation rose by 0.29 points to 18.40 percent. Annual inflation in the processed food group rose by 1.61 points to 19.72 percent, while in the unprocessed food group, it declined by 1.07 points to 17.01 percent due to base effects. In this period, fresh fruit and vegetable inflation declined slightly, while meat prices continued to increase in the other unprocessed food group, and the lagged effects of the adjustment in the raw milk reference price continued to reflect on milk prices (5.17 percent). Processed food prices continued to increase rapidly with 2.27 percent on a monthly basis in February. In parallel with the increase in meat prices, the prices of processed meat products increased (3.03 percent), while the indirect effects of the raw milk price adjustment continued to be felt in related groups, particularly in cheese and other dairy products (5.78 percent).

With the effect of the developments in international commodity prices, the high rate of increases in fats and oils continued. With these developments, the annual inflation in the food group excluding fresh fruits and vegetables rose to 20.75 percent. With the slowing effect of the increase in the SCT on alcoholic beverages in January, the annual inflation in the alcoholic beverages group increased by 2.31 points to 20.79 percent in February.


Domestic producer prices rose 1.22 percent in February, and annual inflation increased by 0.93 points to 27.09 percent. Increases in international commodity prices and ongoing problems in the supply chain were determinant in this rise in producer prices. Despite the appreciation in the Turkish lira in February, high rates of price increases continued in the input providing sectors such as petroleum, chemical products, food, wood, cork and paper. Accordingly, the trend of manufacturing industry prices excluding petroleum and base metals declined, but remained high.
When analyzed according to the main industrial groups, annual inflation increased in the energy and non-durable goods group, while it remained almost flat in the intermediate goods and durable consumption groups, and declined in the capital goods group.

On a monthly basis, while prices in all sub-groups except the capital goods group increased, the increase in prices of nondurable consumption goods was particularly noteworthy. Textile yarn and fibers, wood products, products linked to the construction industry and paper products stood out in the price increase in the intermediate goods group.

While the effects of the oil price increase were observed in the outlook in energy group prices, the increases in the prices of furniture and household appliances in the durable consumption goods group continued in this period as well. In non-durable consumer goods, prices of pharmaceuticals as well as meat and dairy products and fats and oils attracted attention throughout the food manufacturing sector. On the other hand, metal construction products and computers and peripherals stood out in the fall in capital goods group prices. With these developments, producer price pressures on consumer prices continued strongly.




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