Monthly inflation: TurkStat says 1.08, ENAGrup says 3.36 percent

* Photo: Anadolu Agency (AA)

Click to read the article in Turkish

Shortly after the Turkish Statistical Institute (TurkStat) shared the "Consumer Price Index" for March 2021, the Inflation Research Group (ENAGrup) has also released its own statistics on consumer inflation.

While the state agency TurkStat has said that the monthly consumer inflation rate was 1.08 in March, the ENAGroup has indicated that its estimate as to the monthly inflation rate is 3.36 percent.

CLICK - Turkey's inflation rate tops 16 percent after 20 months

The ENAGrup has shared its analysis in following words:

Emphasis on dismissal of Central Bank head

"The ENAGrup monthly inflation rate is estimated at 3.36 percent in March 2021. Certain factors played a role in the emergence of this ratio. We will briefly refer to them below.

"The most important news of March that had an impact on the economy has been the dismissal of Central Bank President Naci Ağbal and Vice President Murat Çetinkaya at separate times, and the appointment of new ones. The fact that these two changes came to the end of the week caused

a) an increase in the volatility in the exchange rate, and the depreciation of the lira
b) an increase in the daily inflation rate
c) a significant decrease in the stock market index and
d) sudden jumps in the interest rate.

"The fact that these dismissal decisions came right after the 200 basis point increase in interest rates has raised many questions and the answers have not yet been taken.

'Prices started to rise again'

"We see that the general level of prices started to rise again, following the relatively soft trend in the first months of the year.

"The factors that caused for this hike in price levels are:

1. exchange rate jumps are now more rapidly added to consumer prices
2. global increase in intermediate and capital goods prices
3. increase in oil prices due to the accident in the Suez Canal.

'Increase in prices will accelerate'

"With the increase in the number of cases in the Covid-19 epidemic, the introduction of new restrictions introduced will adversely affect economic activities in April 2021; primarily reducing investment and consumption expenditures.

"With the end of short work allowance, the decrease in hours worked (unemployment) will increase and the falling income level will reduce the total demand as well. All these declining economic activities will certainly affect the direction of inflation.

"The Inflation Research Group (ENAGrup) estimates that the increase in the general level of prices will accelerate in the upcoming period." (HA/SD)

* Click here for the Monthly Inflation Bulletin of ENAGrup and here for the Inflation Report and Economic Analysis.