Bloomberg News

Turkish Inflation Rate Declined to 6.15 Percent in September

October 03, 2011

Oct. 3 (Bloomberg) -- Turkish inflation slowed in September, a decline the central bank says will probably reverse later this year as the lira’s drop pushes import costs higher.

The inflation rate fell to 6.15 percent from 6.7 percent in August, the statistics office in Ankara said on its website today. The median estimate of eight economists surveyed by Bloomberg was 6 percent. In the month, prices rose 0.75 percent.

A year-earlier jump in food prices helped cap inflation this September. Any decline will prove temporary and inflation is likely to accelerate toward the end of the year, central bank Governor Erdem Basci said Sept. 30. The lira fell 22 percent against the dollar in the 12 months through September, driving up the price of imported goods and fuel.

“The rise in electricity prices combined with the temporary pass through effects of lira depreciation is likely to reflect on the October and November CPI readings,” Nurhan Toguc, chief economist at Ata Invest in Istanbul, said in an e- mailed report.

The energy regulator on Sept. 29 raised household electricity prices 10 percent, effective Oct. 1. State gas importer Botas said residential gas prices will rise as much as 14 percent.

Consumer-price growth may accelerate to 8.5 percent by the end of this year, compared with an official target of 5.5 percent, the International Monetary Fund said Sept. 22. There’s “a high chance” that the bank will meet its 2012 goal of 5 percent, Basci said Sept. 30.

Rate Cut

The central bank cut its benchmark repo rate to 5.75 percent on Aug. 4, arguing the reduction was needed to shield the economy against possible recession in Europe, Turkey’s main trade partner. The bank argues that its overall monetary policy is disinflationary because controls on the supply of money and curbs on bank lending outweigh the lower interest rate.

The cost of goods leaving Turkish factories and mines rose an annual 12.15 percent in September, compared with a rise of 11 percent the previous month, the statistics agency said today. Producer prices rose 1.55 percent in the month.

--With assistance from Giovanni Salzano in Rome. Editors: Ben Holland, Louis Meixler.

To contact the reporter on this story: Steve Bryant in Ankara at sbryant5@bloomberg.net.

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net.


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