Turkey’s annual consumer price inflation is expected to climb towards 12% in August, a Reuters poll showed on Monday, pushed up by higher energy prices and the weak lira.
The median estimate in a Reuters poll of 14 economists for annual inflation in August stood at 11.91%, with forecasts ranging between 11.40% and 12.37%. Inflation was 11.76% in July.
Monthly inflation was expected to be 1%, with estimates between 0.56% and 1.41%.
“Despite the favorable base year impact, higher energy prices as well as the FX pass-through impact, especially on core good prices, will carry the annual inflation close to 12%,” said Ozlem Bayraktar Goksen, chief economist at Tacirler Yatirim.
“VAT cuts on some services (especially on hotel and restaurant prices) are considered to have a downward effect… However, the prevailing depreciation in the lira would increase the pressure on the core goods prices in August.”
The Turkish currency <TRYTOM=D3>, which hit a series of record lows against the U.S. dollar in August, has shed 19% of its value so far this year.
The Turkish central bank ended a run of rate cuts in June and has held its policy rate at 8.25% since then, citing some uptick in prices. It raised its year-end inflation forecast to 8.9% a month ago but said inflation will enter a falling trend beginning in July.
For the year-end, the poll’s median inflation estimate of 10 economists was 11%, compared to 10% in the July poll.
Annual inflation fell to 11.76% in July, reversing two months of rising inflation as the economy continued to emerge from lockdown.
On Sunday, Turkey increased its special consumption tax on mid-range and expensive cars, a move which economists said could lift year-end inflation by up to 1%.
The Turkish Statistical Institute is expected to announce August inflation data on Thursday, Sept 3 at 0700 GMT.