What matters on Friday, May 6

Monthly inflation reached 7.25% while annual inflation rose from 61.14% to 69.97% in April, compared to the previous month, according to the Turkish Statistical Institute (TurkStat). The economic world estimated the monthly inflation would rise by 5.6% and the annual inflation would reach 68%. The annual inflation has seen its highest level since March 2002, when it rose to 65.1%. Thus, annual consumer inflation hit a 20-year high as food and energy prices sharply rose.

The domestic producer price index (D-PPI), or producer inflation, continues to produce three-digit figures. TurkStat said the D-PPI rose by 7.67% in April, while the annual producer inflation increased from 114.97% to 121.82% last month as compared to February. Thus, the annual producer inflation has seen its highest level since 1995.

The pandemic and the Russia-Ukraine war raised inflation across the world, according to Treasury and Finance Minister Nureddin Nebati. “In addition to interruptions in the supply chain caused by the pandemic, the surge in global energy, food, and other commodity prices due to the Russia-Ukraine war has paved the way for inflation to rise across the world. For instance, inflation hit a 41-year high in the U.S. and a 40-year high in Germany and France. The situation isn’t different in other European countries,” Nureddin Nebati said on Twitter.

Nebati also emphasized that inflation continues to be high in line with foreign exchange (FX) rate developments in Turkey. He said the government and central bank have ensured stability in financial markets and significantly controlled FX rate volatility since December 2021 when measures such as FX-protected TRY deposit accounts were implemented.

Stressing that they have taken and continue to take extensive measures, from the Value-Added Tax (VAT) and other tax reductions to field audits, from subventions in strategic sectors and commodities to comprehensive incentive packages, Nureddin Nebati added: “We’ll soon reap the fruits of the ‘Product Monitoring System’, which was set up in coordination with our Ministry to prevent stockpiling and track the course of prices. We are aware of all problems experienced by our people due to high inflation, and we will never ignore these problems.”

Global stock exchanges have started to rise after the Federal Reserve raised the interest rate by 50 basis points, however no statements were made about tightening as far as markets were concerned. COVID-19 measures in China and news about the Russia-Ukraine war continue to pressure markets. Turkey’s benchmark stock index Borsa Istanbul, which has drawn attention with its recent surge, continues to differentiate positively from global markets following the Federal Reserve’s decision.

The BIST 100 Index was up 1.47% or 35.71 points on Thursday to close at 2,466.26 points. At Friday’s close, the last transaction day before the Ramadan holiday, the BIST 100 index was slightly up by 0.09% to 2,494.37 points. Closing the day with a market value of around TRY 2tr, the benchmark index posted a daily trading volume of TRY 36.4bn.


The Central Bank will release Real Effective Exchange Rate for April (2.30 pm).


>> Turkey’s exports rose by 24.6% to USD 23.4bn in April, year-over-year, according to Trade Minister Mehmet Mus. Mus said the figure is the all-time highest in monthly exports. Imports climbed by 34.9% to USD 29.4bn in the same period. The foreign trade deficit, meanwhile, jumped 98.1% to USD 6.1bn in the same period.

>> The Istanbul Chamber of Industry (ICI) Turkey Manufacturing PMI (Purchasing Managers Index), considered among the leading indicators of the economic growth, posted 49.2 in April, down from 49.4 in March. The index pointed out that Turkey’s manufacturing industry has decelerated for the second successive month.

>> President Recep Tayyip Erdogan spoke over the phone with his French counterpart Emmanuel Macron to discuss the Russia-Ukraine war, regional developments, and bilateral ties, according to the Communications Directorate. Turkey-France relations are ‘of great importance’, Erdogan said, adding that Ankara continues its efforts to end the Russia-Ukraine war through diplomacy. He also congratulated Macron on his re-election, who won a second term last month.

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