Goldman Sachs, Morgan Stanley and J.P. Morgan commented on Turkey’s June inflation, noting that disinflation started better than expected. For the year-end inflation target, Goldman Sachs estimated 36 percent, Morgan Stanley 42.4 percent, and JPMorgan 42.5 percent.
Morgan Stanley emphasized the decline in core inflation in its report, commenting on a good start to disinflation. The monthly inflation of 1.6 percent was the lowest monthly inflation data in the last 13 months. For year-end inflation, Morgan Stanley estimated 42.4 percent. The Central Bank is expected to continue its tight monetary policy.
According to the report at CNBC-e, the bank emphasized that annual inflation fell more than expected with 71.6 percent. Nevertheless, it was commented that services inflation and tax increases pose a risk to inflation. Morgan Stanley pointed out that the USD/TL exchange rate has changed by 2 percent in the last 3 months.
Goldman Sachs’ year-end inflation forecast is 36 percent
Goldman Sachs also stated that inflation fell faster than expected. It was pointed out that core inflation data is closely related to exchange rates and the calm TL/USD parity played an effective role in low core inflation. Just like Morgan Stanley, Goldman Sachs also emphasized the stability in TRY since March.
Goldman Sachs stated that services inflation is still high, and commented that a decline will be seen here in the coming months. Due to market perception, it was suggested that the inflation expectation will change quickly while sticking in the service sector.
The report also emphasized that the economic administration will not change the minimum wage. It was mentioned that the growth figures in the first half of the year were better than expected and demand for the second half of the year started to slow down.
With this slowdown effect, it was stated that headline inflation could decline to 36 percent for 2024.
JPMorgan emphasizes the tightening
Turkey’s inflation rates fell more than expected in June, according to JP Morgan’s latest report. Headline inflation fell to 71.6 percent year-on-year in June from 75.5 percent in May. The slowdown in core goods prices played an important role in this decline.
According to the report, core goods inflation rose by 0.1 percent month-on-month to 50.6 percent year-on-year in June. Services inflation, on the other hand, fell to 95.3 percent year-on-year. Food prices also rose by 1.8 percent monthly, bringing annual food inflation down to 68.1 percent.
Electricity price hikes and automatic consumption taxes increase upward pressure on inflation
J.P. Morgan emphasizes that the 38 percent hike in electricity prices and the increase in automatic consumption taxes have increased upward pressures on inflation. However, headline inflation is expected to fall to 42.5 percent by the end of the year. Moreover, the inflation forecast for the end of 2025 is set at 25 percent.
The report states that the Central Bank should maintain its tight monetary policy and emphasizes that fiscal policy tightening should continue; otherwise, it will be difficult to control inflation.
