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Turkey Inflation May 2019

Turkey: Feeble domestic demand continues to drive down inflation in May

Consumer prices rose 0.95% month-on-month in May, down from April’s 1.69% increase. The latest print reflected cheaper food and non-alcoholic beverages and furnishing, household equipment and maintenance offsetting a pick-up in consumer prices for alcoholic beverages and tobacco; clothing and footwear; and transportation.

Inflation, meanwhile, moderated to 18.7% in May from 19.5% in the prior month. This marked the lowest reading since August last year. Core inflation, which excludes more volatile price items such as energy and food, dropped to 15.9% from 16.3% in April; anemic domestic demand is driving down core inflation.

Commenting on the data release, Yarkin Cebeci, analyst at J.P. Morgan, noted that inflation came in below expectations for the second month running; however, Cebeci also pointed to the stronger base supporting the recent downward trend in inflation. Moreover, Cebeci said it was too early to adjust their inflation forecast, as “the FX pass through remains to be the main inflationary force and the currency is as volatile as ever.”

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