Turkish inflation below forecasts, as food prices slow down

Turkish inflation below forecasts, as food prices slow down

Turkish inflation below forecasts, as food prices slow down Turkish consumer prices rose less than forecast in September on the back of a significant fall in food prices, data from the Turkish Statistics Institute (TÜİK) showed on Oct. 3. 
Consumer prices increased by 0.18 percent month-on-month in September, while annual inflation hit 7.28 percent last month, down from the 8.05 percent posted in August, stimulating expectations for further rate cuts by the Central Bank. 

The highest monthly decrease was the fall of 3.49 percent in clothing and footwear, while the indices declined for food and non-alcoholic beverages by 0.7 percent and for recreation and culture by 0.43 percent. 

“The retreat in inflation is important because the Central Bank regularly introduces rate cuts. After this decline in inflation, I think there will be one more rate cut in the October monetary policy meeting. Most probably the policy rate will be established at 7.50 percent at the end of a policy simplification,” Enver Erkan, an analyst with KapitalFx, was quoted as saying by the state-run Anadolu Agency. 

The Central Bank’s monetary policy committee said after its last rate-setting meeting that it expected headline inflation to fall in the short term, and therefore decided to maintain a cautious policy stance. 

“The fall in annual inflation and the parallel trend in core inflation indicators give the Central Bank a stronger case for another rate cut in its meeting on Oct. 20 … Our expectation is for another 25 basis points cut,” said Muammer Kömürcüoğlu, research director at the Istanbul-based brokerage house İş Invest, as quoted by Reuters.

Turkish Finance Minister Naci Ağbal said the fall in core inflation indicators in September supported the Bank’s rate cuts and vowed to take structural measures to push food and beverage prices further down. 

“Our government will continue to take structural measures to make the deceleration in food prices long lasting,” tweeted Economy Minister Nihat Zeybekci, noting that the core inflation rate regressed to its lowest rate of the last 13 months. 

“Our main aim is to keep inflation rate well below 5 percent in the long term, in order to ensure genuine price stability,” added Zeybekci.