Turkey’s inflation eases as food prices slow down

ANKARA

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Turkey’s inflation rate slowed down more than forecast in February as increases in food prices lost pace, according to Turkish Statistics Institute (TÜİK) data released on March 3. 

The annual inflation rate fell to 8.78 percent in February from 9.58 percent in January, marking a decrease of 0.02 percent in February from the previous month, according to the data.    
    
“The most important factor behind the drop in the inflation rate is the decline in food and nonalcoholic beverage prices on a monthly basis. This made food inflation decline to 8.83 percent annually,” said ALB Securities analyst Enver Erkan in a note. 

According Erkan, the Turkish government’s recent intervention into meat prices seems to have had an effect in lowering the inflation rate.        

The Food and Agriculture Ministry decided in February to impose a price ceiling for red meat in a bid to control price rises.        

The Central Bank increased its inflation forecast rate in February by one point from 6.5 to 7.5 for 2016, having kept its “5 percent target” for the following three years. 

Finance Minister Naci Ağbal said on March 3 that monetary policy was not enough to reduce inflation and further measures will be taken, without specifying what they would be. 

Speaking at a news conference in Ankara, Ağbal said food prices needed to be lowered and he is working with the Agriculture Ministry on measures to ease food prices soon, Reuters reported. 

Development Minister Cevdet Yılmaz suggested that the Turkish Lira’s moderate depreciation against the dollar helped ease the upward pressure on inflation.

“A slower depreciation will continue to ease the pressure on the consumer price index,” Yılmaz said in a statement, as quoted by Reuters. 

“A stable trend of the forex prices depends on political developments as well as on economic factors,” he added.