Turkey: Inflation drops to a record low in March
March 3, 2011
In March, consumer prices rose 0.4% over the previous month, which was less than half of the 0.9% rise expected by market analysts. The subdued reading followed on a 0.7% increase in February and was below the 0.6% rise tallied in March 2010. As a result, annual inflation fell from 4.2% in February to 4.0% in March, which is the lowest inflation rate on record. The monthly reading benefited from lower prices for food and non-alcoholic beverages (-0.4% month-on-month), which partially offset higher transportation costs (+1.6% mom). Meanwhile, the core inflation index, which excludes more volatile categories such as unprocessed food and energy, rose 0.6% over the previous month. Annual core inflation remained unchanged at February's 4.0%. The Central Bank has a year-end inflation target of 5.5% for 2011 and 5.0% for 2012 but forecasts inflation to end 2011 at 5.9%, before declining to 5.1% in 2012.