Food and energy prices have been a determining factor in the drop of the March consumer prices index, the Central Bank of the Republic of Turkey (CBRT) said.

The bank’s assessments came in its March price developments evaluation Monday after the country’s inflation rate fell to 11.86% in the month as a drop in global oil prices provided some relief after increasing for four consecutive months. Month-on-month, consumer prices rose 0.57% in March.

In February, year-on-year consumer price inflation was at 12.37%, and it has remained lofty after a decline through much of last year.

Energy costs have decreased significantly with the rapid decline in oil prices, the bank said, adding that the prices of fresh fruits and vegetables were also effective in the slowdown of annual food inflation. Prices in non-fresh fruits and vegetable items accelerated, it noted.

Turkey is nearly completely dependent on imports to meet its energy needs and a global drop in prices last month led to a 1.91% decline in transportation-related prices.

Basic goods groups' contribution to annual consumer inflation, compared to February, increased by 0.28 points, while the energy, food and service groups’ contribution decreased by 0.67, 0.10 and 0.03 points, respectively, the report said.

Basic goods groups' annual inflation jumped by 1.13 points to 8.18%. Annual energy inflation dropped by 5.73 points to 9.81%.

Food inflation slowed to 10.1% from 10.6% the previous month. The figure is just below the central’s bank’s year-end forecast of 11%. Prices of some vegetables are said to have dropped after goods that couldn’t be exported due to the coronavirus measures were sold in the domestic market.

Monday’s assessment indicated that service inflation declined to a limited extent last month, while inflation in basic goods groups increased with the developments in the exchange rates. It was also stated that in the core indicators annual inflation accelerated slightly.

Inflation was a pressing issue for the economy after it surged to a 15-year high of above 25% in October 2018 but briefly touched single digits last fall thanks largely to a base effect and tight monetary policy. It has since edged up, remaining at around 12% in the past months.

Analysts have said the possibility of reaching single-digit inflation in the second half of the year continues when taking into consideration the central bank's guidance and that the decline in oil prices could contribute to this.

The CBRT, which has slashed interest rates by 1,425 basis points since July 2019, aims for inflation to drop to single digits this year. It predicted that inflation would fall to 8.2% by the end of the year.

The price of Brent oil has fallen to below $25 (TL 169) per barrel from $72 at the beginning of January, leading Turkey to cut petrol prices by TL 1.5 ($0.22) in March, and diesel oil prices by around TL 1.

The government's year-end inflation target is 8.5% for 2020 as laid out in the government's New Economic Program (NEP) announced last September.

Over the last decade, annual inflation saw its lowest level at 3.99% in March 2011, while it peaked at 25.24% in October 2018.