June PPI Data: Production Costs Soar 28.78% Annually

Data released by the Turkish Statistical Institute (TÜİK) reveals that cost pressures on the production side remained robust in June, driving the industrial producer price index (PPI) to an annual peak with a sharp surge of 28.78%.

Inflationary Wave Sweeps Production Sector

In June, price formations in industrial production followed a trajectory above expectations with a monthly increase of 1.37%, while the annual rise of 28.78% compared to the same month last year stood out. The data indicates a 16.63% increase compared to December, exposing the accumulated costs since the beginning of the year.

In the sectoral breakdown, the most dramatic surge was observed in mining and quarrying:

■ Mining and quarrying recorded a record annual increase of 52.36%.

■ The manufacturing industry became the main driving force with an annual increase of 29.8%.

■ Water supply and waste management activities showed an increase of 29.26%.

Price Dynamics in Main Industrial Groups

Price movements in consumer and investment goods clarify how inflation is fed through demand and cost channels. The rise in non-durable consumer goods reflects pressures on food and basic necessities, while the increase in capital goods pulls investment costs upward.

■ A sharp annual rise of 32.11% was observed in non-durable consumer goods.

■ While the energy group recorded an annual increase of 30.13%, a monthly moderation of 0.3% occurred.

■ Capital goods rose by 21.87% annually, and intermediate goods by 28.72%.

According to our historical regression models, this annual 28.78% trajectory in PPI signals a significant cost pass-through to the Consumer Price Index (CPI) in the coming quarter. Particularly, the increases in mining and manufacturing create a challenging test for the central bank in reducing core inflation. Although there is a monthly decline in the energy group, the high annual base limits the downward flexibility of costs.