Chronic inflation

The decline in inflation will become more pronounced during the second half of the year after a partial correction in food prices, Turkish Central Bank Governor Erdem Ba?ç? said on April 18, according to the Bank's website.

The improvement in Turkey's core inflation continued in February, with the slight rise largely due to food prices, the Central Bank announced on March 4.

In a statement after data on March 3 showed consumer prices in February rose by 0.71 percent, slightly lower than expected, the Bank stated that non-food annual inflation continued to fall.

As I noted in my last column, almost all Turkey economists were expecting the Central Bank to cut its policy and borrowing rates at the Monetary Policy Committee rate-setting meeting on Feb. 24.

Turkey's lira recovered from a record low today as investors weighed up the prospect of a rate cut after the Central Bank governor said a decision on whether to hold an early policy meeting would be made following tomorrow's inflation data.

Inflation rates made a surprise in December and were below the annual inflation expectations. The market expectation was for a slight price increase, but the figures announced the other day showed that consumer prices had dropped 0.44 percent in December.

A friend told me on Friday that most of the 2015 Turkish economy predictions he had seen on TV were rosy, prompting me to go through all the analyst reports I could get my hands on over the weekend. Here is the story they all seem to be telling:

Inflation to total 2.5 percent by end of year

BELGRADE -- Inter-annual inflation will total around 2.5 percent in the next few months, which is the upper limit of the target inflation rate, according to the NBS.

The central bank also said there is a chance for inflation to remain within the 4 percent plus or minus 1.5 percent target rate in some months.

Despite the fall in world commodity prices, primarily oil, in Turkey inflation rates cannot be pulled down to the desired level. Central Bank Governor Erdem Başçı announced the Inflation Report last week, saying that they had expected a fall in inflation in October, but the opposite happened.

Turkish inflation dropped under 9 percent in September for the first time in five months, beating the market expectations, during the month before the hike in gas and electricity prices are implemented.

Turkish inflation accelerated above expectations in July, climbing to 9.32 percent on an annual basis due to disappointing food price levels, official data has shown, marking the fourth consecutive month that the rate remained above 9 percent.