Turkey – May CPI will most likely reflect stickiness

Turkey will release May CPI figures on Wednesday 3 June. CPI was widely expected to decline steeply this year compared to last. 

"We forecast 7.5%, from 7.9% in April and 9.6% a year ago",said Standard Chartered in a report on Tuesday.

As expected, lower oil prices were the largest contributor to decelerating inflation. However, the rapid depreciation of the lira (TRY) has acted as a brake, as pass-through effects of the weaker TRY on the CPI have demonstrated. 

Average CPI inflation in the first four months of this year stood at 7.57%, versus 8.35% the year before. While an improvement, this is far from what had been expected and the central bank (CBRT) was recently forced to raise its year-end CPI forecast to 6.8%.