Central Bank emphasizes ‘FX transitivity’

The developments in foreign exchange (FX) rates reflected on the increase in many items of inflation, while producer prices driven pressures were strongly felt as a result of TRY’s devaluation, according to the Central Bank’s price developments report about the outlook of inflation, which hit a 19-year high at 36.08% in December.

The bank said the annual inflation rose in all main groups and the most significant contribution to inflation increase was made by the basic goods and food subgroups. 

The annual inflation in basic goods rose by 22.19 points to 40.55%, according to the Central Bank. 

“The annual inflation significantly increased in all subgroups depending on developments in TRY and widespread price hikes were recorded in this period,” the bank said. 

“Durable goods prices rose by 30.33% on a monthly basis. The rise was driven by automobile prices while high price increases were observed in white goods, other electrical and non-electrical devices, and furniture. The price of tobacco products rose by TRY 2.00 in December. The price of tobacco products rose by 11.96% in this period. This development had a 0.49-point effect on consumer inflation,” the report read. 

The surge in domestic energy prices including fuel, bottled gas, and coal, continue with the reflections of FX rate developments although international energy prices declined in this period.

Producer prices-driven pressures had a strong pace as a result of ongoing interruptions in supply changes, a high course in commodity prices, and TRY’s devaluation. 

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