Turkey's monthly consumer confidence index was lower in September, according to official data released Thursday.
The index decreased 3.4 percent to 68.7 in September from 71.1 in August, the Turkish Statistical Institute (TurkStat) said in a report.
This index is seen as a vital gauge of the overall health of the economy, indicating people's sentiments about spending their money, which in turn gives clues about economic vitality.
All sub-indices of the main index were lower in the month with the probability of saving index -- indicating people's expectation of earning enough money to save -- showing the sharpest decline, down 10 percent to hit 20.2 in September from 22.4 in August.
Turkey's general economic situation index was the second worst performer, slipping by 3.3 percent to 94.7 compared to last month.
The number of people unemployed expectation index -- a gauge of sentiment about the health of the labor market -- was down 2.7 percent and stood at 70.5 in the month.
Turkey's financial situation expectation of household index was the least-hit figure in the month, decreasing 2.5 percent to reach 89.6 in September.
Commenting on decrease in consumer confidence index, Ziraat Bank economist Bora Tamer Yılmaz said one would expect to see a higher level of consumer confidence in a country which has a more-than-five percent growth rate and strong credit demand.
Turkey's economy grew 5.2 percent in the first quarter of this year and 5.1 percent in the second, compared with the same periods of 2016, according to TurkStat.
"This year consumer confidence indices have trended upward globally. Consumption demand plays a significant role in global economic recovery. However, the index still can't get traction in Turkey," Yılmaz stated.
Turkey's consumer confidence index started 2017 at 66.9 in January and it hit its highest level with 72.8 in May, TurkStat said.
Referring to the biggest decline in the probability of saving index, Yılmaz said there were two probable reasons behind the weakness, either a dis-connect between consumer utility and actual spending or a fast euro appreciation hurting purchasing power.
"The euro has appreciated by 13 percent year-to-date. Many consumer products, domestic appliances or durable goods are priced in euros," Yılmaz noted and added that volatility in the euro affects purchasing power in such an environment.
Yılmaz underlined that there is a correlation between the trade weighted real exchange rate and consumer confidence.
"The euro has a higher weight in the real exchange rate due to strong trade relations. The euro effect can also be observed in core consumer inflation which hovers above 10 percent. Probably fast euro appreciation has curbed consumer confidence in Turkey," he said.
Enver Erkan, an analyst at KapitalFX, said the downfall in September had mainly been led by the decline in the future expectations and consumption tendencies of individuals.
Erkan noted that geopolitical risks, especially tensions between the U.S. and North Korea and in the Middle East, had an effect on the downfall in Turkey's consumer price index in the month.
"The crisis on the Korean peninsula and the uncertainty of Federal Reserve decisions in the first two weeks in September caused financial risks and concerns over the global markets.
"Also, the movements outside our southern border and rising tension in relationships with Germany caused domestic risks, which are responded to in the financial markets," he said.