The increase effect in the exchange rate is effective in the high course of inflation. We expect that the cost pressure caused by the depreciation of TRY on imported inputs has not yet fully reflected on final prices in the previous period, and therefore the upward pressure on inflation will increase. Core inflation and PPI will cause an increase in the headline CPI, we can see in September inflation, especially since it is the month following the final price reflection of the high increase in PPI in the previous months. In addition, increased private consumption tax rates on imports, the ending of the positive effect on food during the summer months, and the rise in clothing that can be seen with the effect of the new season may have an upward effect on inflation. As there was no base effect assistance from the previous year, inflation may exceed the target in the following months. Another peak can be seen in October.
The issue of stabilization of the TRY is important, therefore, it will be important for the Central Bank to advance the tightening step and its determination in this direction. The interest rate decision in the MPC on October 22 and forward guidance in the Inflation Report on October 28 will be monitored in terms of inflation expectations and there will be critical junctures. Our inflation expectation by the end of the year is 12.2%.
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