Turkey's inflation puzzle: Central Bank sheds light

In December, consumer prices rose by 2.93%, pushing the annual inflation rate up by 2.79 points. The year ended with an inflation rate of 64.77%, which is below the forecast's midpoint in the latest Inflation Report.

The report points out that exceeding the free natural gas usage limit contributed 0.29 points to the monthly consumer inflation. However, declining fuel prices helped mitigate the overall increase in the energy sector.

Significant increases in vegetable and red meat prices meant that nearly half of the monthly consumer inflation originated from the food sector.

In terms of durable goods, the prices of white goods and medicines, particularly in their respective sub-groups, led to a slight increase in the basic goods group's monthly price rise compared to the previous month.

Expected wage increases seemingly influenced the rise in durable goods prices. Meanwhile, the services sector experienced a slowdown in its monthly price increase.

The trend of weakening monthly rent inflation persisted, while transportation service prices fell, aligning with the trends in fuel prices.

Producer prices in December saw a slowdown in their monthly increase due to energy sector factors. Yet, the annual producer inflation rate increased, influenced by a low base effect.

Overall, the core inflation trend maintained a relatively stable course compared to the previous month, suggesting a more moderate outlook than previously anticipated in the Inflation Report.