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Wednesday, January 02, 2008

Turkey Inflation November 2007

Consumer prices rose by 1.95 percent in November, bringing the annual inflation to 8.40 percent. Administered prices accounted for about 1 percentage point of the month-on-month increase in headline inflation. The upward trend in the prices of processed food and catering services group suggest that the drought continued to be effective on food inflation in November as well.

Energy prices edged up sharply in November by 6.78 percent, raising the annual inflation in this group to 11.02 percent. This was mainly attributable to the rise in the prices of fuel oil and LP gas, driven by hikes in the Special Consumption Tax, as well as to the new municipal water tariff in stanbul. Aside from adjustments in administered prices, the recent increase in international oil prices was also instrumental in the rise of energy prices. The planned hikes in electricity and natural gas prices in the upcoming period, together with the future course of oil prices, pose a significant risk to energy prices.

Despite the decline in the prices of clothing and footwear, the year-on-year inflation in goods excluding energy and unprocessed food posted an increase in November due to significant price hikes in processed food, tobacco products and gold. The prices of consumer durables, on the other hand, maintained its downward trend in November. Following the tax hikes on tobacco products, the prices of alcoholic beverages and tobacco group increased by 6.51 percent month-on-month, bringing the annual inflation rate for this group to 17.21 percent. In other words, nearly 0.85 percentage pointsof the annual CPI inflation stems from the tobacco prices.

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