Türkiye Web CPI Rises 2.48% in March, Annual Inflation Eases to 31.68%

Türkiye’s web-based consumer price index (CPI) rose by 2.48% in March, bringing annual inflation down to 31.68%. While food inflation showed signs of slowing compared to the first two months of the year, it remained elevated. Energy prices climbed on the back of higher fuel costs, while core goods inflation stayed relatively subdued. Services inflation, however, continued to accelerate, driven by transportation and communication costs.

Core Inflation Trends Show Mixed Signals

The B index (a key core inflation gauge) recorded a monthly increase of 1.72%, down by 0.28 percentage points from the previous month. In contrast, the C index rose by 1.83%, marking a 0.35 percentage point increase.

Seasonally adjusted data indicate a moderation in underlying inflation momentum. Headline CPI rose 2.29% on a seasonally adjusted basis, while the B and C indices increased by 1.79% and 1.92%, respectively. The underlying trend softened from 2.13% to 1.85%, suggesting a gradual easing in price pressures.

Food Inflation Remains Elevated Despite Slowing Momentum

Food and non-alcoholic beverage prices increased by 3.07% in March, with annual inflation easing to 35.16%. Although price increases slowed compared to earlier months, food inflation remained one of the main drivers of overall price pressures.

Fresh fruit and vegetable prices rose sharply by 7.43% month-on-month, though annual inflation in this category declined to 46.91%. Within this group, fresh vegetables surged by 10.73%, while fresh fruits rose more modestly by 0.84%.

Unprocessed food items such as meat, fish, and eggs increased by 3.40%, with annual inflation slowing to 36.03%. Meat prices remained a key contributor, with lamb rising 7.45%, chicken 7.83%, and beef 2.00%.

Processed food prices showed more moderate increases, rising 1.25% in March and easing to 31.29% annually.

Standout Food Price Increases

Monthly increases were particularly sharp in certain vegetables:

• Eggplant: +63%
• Green peppers: +45%
• Lettuce: +40%
• Cauliflower: +34%
• Stuffed peppers: +32%

On an annual basis, the largest increases included:

• Eggplant: +220%
• Dill: +157%
• Quince: +143%
• Zucchini: +125%

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Energy Prices Rise on Fuel Costs

Energy prices rose by 5.02% in March, pushing annual energy inflation up to 32.74%. The increase was largely driven by higher global oil prices, which fed through to domestic fuel costs.

• Diesel prices rose 13.93%
• Gasoline increased 7.64%
• LPG climbed 0.99%

Other energy components saw more moderate increases, including water bills (+2.00%), bottled gas (+1.83%), and coal (+1.78%).

Core Goods Inflation Remains Subdued

The core goods category continued to show relatively modest price pressures, rising just 0.38% in March. Seasonal declines in clothing prices and stable exchange rates helped limit increases in durable goods.

Clothing and footwear prices fell by 2.26%, maintaining a negative trend. Meanwhile, favorable EUR/TRY parity effects led to price declines in some automobile segments. White goods prices also remained largely stable.

Durable goods prices rose by 0.83% month-on-month, with annual inflation slowing to 23.31%. Other core goods increased by 1.90%, partly due to pharmaceutical price hikes, though annual inflation in this category eased to 16.28%.

Authorities are expected to implement the remaining portion of drug price adjustments on April 1.

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Alcohol and Tobacco Prices Increase

Alcoholic beverages and tobacco prices rose by 5.25% in March, reflecting the delayed impact of cigarette price hikes introduced in the previous month.

Services Inflation Accelerates Further

Services inflation increased by 2.97% in March, pushing annual inflation up to 44.71%, making it one of the stickiest components of overall inflation.

• Rent inflation rose 2.59% monthly, with annual rent inflation easing slightly to 59.16%
• Restaurants and hotels increased by 1.80% monthly, with annual inflation reaching 36.49%

Transportation services stood out with a sharp 6.25% increase, driven by holiday-related demand and public transport fare hikes.

• Intercity bus fares rose 8.12%
• Car rental prices increased 5.08%
• Ferry, taxi, and school transport fees surged 10.8%
• Metro and tram fares rose 6.22%

Airfare prices, however, declined by 5.76% during the month.

Communication services continued to show strong increases at 4.88%, while other services rose 2.01%, partly driven by a 3.43% increase in education services.

Hotel prices rose 2.20%, while restaurant food and beverage services increased by 1.70% and 1.65%, respectively.

Outlook: Gradual Disinflation with Persistent Risks

March data suggest that Türkiye’s inflation trend is gradually moderating, particularly in core indicators and seasonally adjusted metrics. However, persistent pressures in services and food categories highlight ongoing structural challenges.

Energy price volatility, food supply dynamics, and upcoming administered price adjustments—such as pharmaceuticals—are likely to shape the inflation outlook in the coming months.

Source:  Bora Kaya, CEO of WEB TUFE