Turkish consumer confidence slides as inflation persists

• Consumer confidence down to 80
• Dip reverses five-month trend
• High inflation keeps pressure on

Turks appear to have taken to heart government efforts to cool the economy and rein in inflation, with the latest consumer confidence survey showing a dip in outlook, reversing a five-month upward trend.

Turkey’s consumer confidence slipped further into negative territory in November, according to data issued by statistics agency Turkstat on November 21, as the index slid from the previous month’s 81 points to 80. 

Any reading below 100 denotes a pessimistic outlook.

The new data reflects the current state of the economy, Seyfettin Gürsel, the director of the Bahçeşehir University Centre for Economic and Social Research, told AGBI.

“There is a narrowing in the economy,” he said. “This index is based on household expectations so in light of this narrowing, the sentiment and outlook are naturally more negative.”

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The survey showed a darkening mood among consumers. Expectations for the general economic situation for the next 12-month period fell to 74 points, down 2 percent, while the outlook for individual households’ economic position over the same term also weakened, easing to 81 points.

Significantly for the retail and industrial sectors, expectations for spending on durable goods over the coming 12 months also fell, dropping 1.5 percent and retreating back into negative territory, the subindex for November standing at 99 points, down from 100 in October. 

At least some of this negativity in Turkish households has been fed by persistently high inflation and interest rates. While the consumer price index has eased from its peak of 75 percent in May to 49 percent in October, in part due to the central bank setting its main lending rate at 50 percent, the last few months have only seen a gradual rolling back of inflation.

Year-end expectations have recently been revised upwards to 44 percent. 

How far household sentiment will reflect on the broader economy may become apparent on November 29, when the central bank releases GDP data for the third quarter. Many analysts are expecting a further slowing of growth as high rates and inflation continue to bite.