Turkey’s consumer price inflation rate fell to a lower-than-expected 11.76% year-on-year in July, official data showed Tuesday, reversing two months of rising inflation as the economy continues to emerge from a coronavirus lockdown.
Month-on-month, consumer prices rose 0.58% in July, the Turkish Statistical Institute (TurkStat) said.
“We will continue with determination our fight against inflation, resolution to reach the target and the structural steps we will take in this regard,” Treasury and Finance Minister Berat Albayrak said on Twitter, evaluating the data.
A Reuters poll forecast a monthly rise of 0.9%, while a group of 15 economists polled by Anadolu Agency (AA) predicted a 0.82% increase.
The polls saw annual inflation at 12.10% and 12.03% in July, respectively, after it rose to 12.62% in June.
The largest consumer price rises in July were in the transportation sector, with a rise of 2.44%, while clothing and footwear prices dropped 3.48%. Key food and non-alcoholic drink prices dropped 1.28%, the TurkStat data showed.
Economists had cited coronavirus-related disruptions to production as contributing to the expected dip in year-on-year price rises.
The Central Bank of the Republic of Turkey (CBRT) last week raised its year-end inflation forecast to 8.9% from 7.4%. It said the 1.5 percentage-point increase was driven by an upward revision in oil prices and food inflation projections.
As pandemic-related demand for goods gradually eases and things return to normal, “inflation will enter a falling trend beginning in July,” the bank’s governor Murat Uysal said.
The bank also raised its forecast for end-2021 inflation to 6.2%, up from a previous forecast of 5.4%.
The revision was also said to be signaling that the bank will not rush to resume interest-rate cuts after it halted an aggressive interest rate-cutting cycle in June and held its policy steady in July.
Prior to June, the bank had cut its key interest rate – the one-week repo rate – from 24% to 8.25% in less than a year in a muscular bid to stimulate the economy and more recently to counter the economic downturn brought on by the coronavirus outbreak.
For the year-end, the Reuters poll’s median inflation estimate of 10 economists was 10%.
The producer price index rose 1.02% month-on-month in July for an annual rise of 8.33%, the data showed.
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