Newsletters
Türkiye's monthly inflation accelerated to 1.8% in July, driven by renewed pressure from higher oil prices, while annual inflation eased to 31.8%, official data showed.
Although the reading came in slightly below the 1.9% consensus forecast, it rose from June's 1.1% monthly increase, slowing the pace of disinflation from June's annual rate of 32.1%, and reducing expectations that the Central Bank of the Republic of Türkiye (CBRT) will resume interest rate cuts in the near term.
According to the Turkish Statistical Institute (TurkStat), energy prices rose 2.3% from the previous month, adding to broader cost pressures across the economy.
Transportation saw the biggest monthly increase among the three largest consumer price categories, climbing 2.6% on the back of higher fuel costs and recent public transport fare hikes.
Housing, which includes water, electricity, gas and other fuels, rose 2.3%, while food increased 1.6%, continuing to put upward pressure on inflation.
Healthcare led all expenditure groups, climbing 10.7% from the previous month.
Core inflation, excluding energy, food and non-alcoholic beverages, alcoholic beverages, tobacco and gold, came in at 1.8% on a monthly basis and 29.9% annually.
Meanwhile, domestic producer inflation slowed to 1.5% month over month and 27.8% annually. Among industrial sectors, electricity, gas, steam and air conditioning recorded the sharpest monthly increase, rising 9.7%.
The data came as one of the major figures that CBRT policymakers would watch before the monetary policy decision scheduled on July 23.
Even though oil prices briefly stabilized, helping calm elevated cost pressures in June alongside improved food supply conditions that pushed prices lower, renewed tensions between the U.S. and Iran in July swept aside expectations for an earlier resumption of interest rate cuts in Türkiye.
The central bank has held its policy rate at 37% since March, while funding the market through the costlier overnight lending rate of 40% to maintain tight monetary conditions and contain inflationary pressures.
In its decision following June's Monetary Policy Committee (MPC) meeting, the central bank acknowledged that inflation's underlying trend had moderated slightly in June but warned that it was expected to rise temporarily in July as higher energy prices, driven by geopolitical developments, renewed cost pressures.
On the other hand, the bank's emphasis on the "weakening in domestic demand" reinforced market expectations that the rate-cut cycle could resume sooner if the disinflation trend remains intact.
Set as preferred source
Set as preferred source
1 min read
1 min read
