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Turkish annual July inflation dips below 12%, lira firms

Turkey’s consumer price inflation fell to a lower-than-expected 11.76% year-on-year in July, official data showed on Tuesday, reversing two months of rising inflation as the economy continued to emerge from lockdown.

The figures boosted the lira, which firmed to 6.9270 against the dollar. The currency weakened last week to 7 on lingering worries over depleted FX reserves and costly state interventions to steady the currency.

Month-on-month, consumer prices rose 0.58% in July, the Turkish Statistical Institute (TUIK) said, compared to a Reuters poll forecast of 0.9%. The poll saw annual inflation at 12.10% in July, 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 drinks prices dropped 1.28%, the TUIK data showed.

Economists had cited coronavirus-related disruptions to production as contributing to the expected dip in year-over-year price rises.

(Graphic: Turkish inflation falls below 12% in July – )

The Turkish central bank, which has held its policy rate at 8.25% since June citing rising prices, last week raised its year-end inflation forecast to 8.9% from 7.4%.

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.

For the year-end, the 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.

Reuters

Volatile Turkish lira tumbles to record low vs euro

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