The Turkish Statistical Institute (TÜİK - TurkStat) announced an increase in the consumer inflation rate for April 2020 compared with the previous month as 0.85%, resulting in a decrease in the annual-to-date rate to 10.94% from the previous month’s rate of 12.37%. The monthly consumer inflation rate was generally in line with rates predicted by market analysts.
The highest monthly increase was recorded in miscellaneous goods and services with 4.66%, followed by clothing and footwear with 4.08%, food and non-alcoholic beverages with 2.53%, and household goods with 1.09%. The highest monthly decrease was recorded in transportation with 1.83%, followed by communication with 1.23%.
Annual increases were recorded in alcoholic beverages and tobacco with 31.32%, followed by miscellaneous goods and services with 20.34%, housing with 14.52%, health with 12.86%, restaurants and hotels with 12.55%, education with 12.35%, and food and non-alcoholic beverages with 11.28%. The lowest annual increase was recorded in communication with 1.55%, followed by clothing and footwear with 4.90%, entertainment and culture with 4.91%, and communication with 5.54%.
There is much speculation as to the accurateness of the inflation figures produced by TurkStat as ordinary citizens understandably feel that they have experienced a much higher rise in the cost of living over the last year. The on-going coronavirus pandemic is having a mixed effect on inflation in Turkey. Lower petrol costs have considerably lowered transportation costs. On the other hand, the Turkish economy, already weak from the current economic recession, is under pressure as global trade contracts and many businesses close down, and the consequent weakening Turkish lira (having lost a value of around 18.5% since the beginning of this year) will have an inflationary effect on the economy. During the current period of lockdown, the food sector has become at the forefront of consumption and strong demand in this sector has increased food prices. Sectors which can be accessed online, such as clothing, have also continued to be in demand as access to other sectors become restricted.
The Turkish Central Bank last week revised its year-end inflation forecast for 2020 downward to 7.4% from a previous prediction of 8.2%. The Bank has also forecast an inflation rate of 5.4% by the end of 2021.