Turkey's annual inflation down to 6-month low

Turkey's monthly inflation rose 0.15 percent in July over the previous month but annual inflation dropped to 9.79 percent, its lowest level in six months, the Turkish Statistical Institute (TÜİK) stated on Aug. 3.

Consumer price inflation fell by 1.1 points, down from 10.9 percent in June, according to TÜİK.

Earlier this week, state-run Anadolu Agency's Finance Desk's survey of 22 economists predicted an average 0.03 percent increase in the monthly rate and an annual rate of 9.52 percent.        

The economists forecast year-end inflation of 9.66 percent.      
  
TÜİK's report showed the highest monthly rises were in the hospitality sector, with hotels, cafes and restaurants seeing a 1.75 percent increase in prices.

Transport prices rose 15.24 percent, making it the main reason for annual inflation.

Commenting on the new rates, Timothy Ash, a senior emerging market strategist at the London-based BlueBay Asset Management, said that although Turkey's headline inflation, which includes commodities such as food and energy prices, dropped to 9.79 percent in July, the core inflation rate, which strips out volatile food and energy prices, actually rose from 9.2 percent to 9.6 percent.      

"The Producer Price index [PPI] was also higher, rising to 15.45 percent from 14.87 percent. So it's better than the expected headline, but disappointing core/PPI," Ash told Anadolu Agency. 

"The Turkish Central Bank this week noted that over the autumn we might see inflation spike back up, as some of the consumption tax cuts roll off, but then drop back at year's end on high base period effects," he added, noting that the core print would still suggest the Central Bank has little near term scope to loosen policy.