Turkey's October Inflation Accelerates Month-on-Month as Food and Energy Costs Push Prices Higher

According to data released by the Turkish Statistical Institute on November 3, Turkey's Consumer Price Index (CPI) rose 2.6% month-on-month in October, higher than September's 1.8% and also exceeding the market expectation of 2.2%; on a year-on-year basis, it rose 27.8%, lower than September's 29.7%.

Rising food and energy prices drove the month-on-month inflation increase higher in October, putting pressure on the ongoing disinflation process.

Data showed that food and clothing prices rose 3.5% and 12.6% month-on-month respectively in October, becoming the main factors driving price increases for the month.

Energy prices rose 4.9% month-on-month, while transportation and housing prices increased 2% and 2.8% respectively.

The core CPI, which excludes volatile items such as energy, food, beverages, tobacco, alcohol, and gold, rose 2.1% month-on-month and 28.3% year-on-year.

On the producer price side, Turkey's Producer Price Index (PPI) rose 1.7% month-on-month and 27.4% year-on-year in October.

Among these, prices in the mining, manufacturing, and water supply sectors rose 4%, 1.79%, and 1.73% month-on-month respectively, while electricity and natural gas production and supply prices fell 0.8%.

The Central Bank of Turkey had previously warned that rising food and energy prices could push October inflation higher.

In the minutes of its October 22 monetary policy committee meeting, the central bank noted that rising fresh fruit and vegetable prices drove food inflation higher, while rising international energy prices were transmitted to domestic fuel oil, bottled gas, and solid fuel prices, intensifying upward pressure on prices.

The Central Bank of Turkey ended a nine-month pause in interest rate adjustments at its October 22 meeting, cutting the policy rate by 100 basis points to 36%.

The central bank also emphasized that geopolitical developments, international commodity prices, and inflation expectations remain important risk factors affecting the disinflation process.

If the inflation outlook deteriorates significantly and persistently, the central bank may tighten monetary policy again.