Turkey’s Inflation Slips More Than Forecast as Slowdown Resumes

(Bloomberg) --

Turkey’s inflation rate resumed its decline as a more stable lira and the effect of a high base of comparison restrain price growth.

Consumer prices rose 15% in August from a year earlier, compared with an increase of 16.7% in July, Turkstat said on Tuesday. The median of 21 forecasts in a Bloomberg survey was 15.6%. Prices rose 0.9% in the month.

Key Insights

• Food inflation slipped to 17.2% from 18.2% the previous month. It remains above the central bank’s year-end forecast of 15%
• The slowdown in food inflation can be attributed to seasonal factors. The government has until recently struggled to keep food costs in check by using a campaign of threats, fines and deep discounts
• A core index that strips out the impact of volatile items such as food and energy dropped to 13.6%, showing significant improvement in the underlying price dynamics; producer price inflation fell to 13.5% from 21.7%
• Turkey’s central bank is poised to continue with interest-rate cuts this month after its record monetary easing in July

Markets

• The lira erased losses after the data and was trading 0.2% stronger at 5.7977 versus the dollar at 10:01 a.m. in Istanbul

Get More

• Read more on the central bank’s inflation expectations here

--With assistance from Harumi Ichikura.

To contact the reporter on this story: Cagan Koc in Istanbul at ckoc2@bloomberg.net

To contact the editors responsible for this story: Onur Ant at oant@bloomberg.net, ;Lin Noueihed at lnoueihed@bloomberg.net, Paul Abelsky

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