Turkey: Inflation accelerates in August
September 5, 2011
In August, consumer prices rose 0.73% over the previous month, which overshot the 0.40% increase expected by market analysts. The monthly reading contrasted the 0.41% fall in July and exceeded the 0.40% drop tallied in August 2010. As a result, annual inflation stepped up from 6.3% in July to 6.7% in August. The monthly increase reflected higher prices for food and non-alcoholic beverages as well as housing. Meanwhile, the core inflation index, which excludes more volatile categories such as unprocessed food and energy, rose 0.39% over the previous month. Annual core inflation jumped from 5.7% in July to 6.5%. At its 23 August monetary policy meeting, the Monetary Policy Committee (MPC) left the policy rate unchanged at 5.75% as expected by market analysts amid a slowdown in global economic activity. In addition, the Committee decided keep the reserve requirement ratio unchanged and stated that ?measures taken at the interim meeting on August 4, 2011 have contained the downside risks for the economy for the time being, and thus decided to keep the policy instruments unchanged.? According to the 18 August Inflation Report, the Central Bank of Turkey (CBT) left its year-end inflation forecast unchanged at 6.9% for 2011 and 5.2% for 2012. The official year-end inflation target remains at 5.5% for this year and at 5.0% for 2012.