Turkey: Inflation falls to one-year low
November 5, 2012
In October, consumer prices added 1.96% over the previous month. The reading was above the 1.03% rise recorded in September but undershot market expectations of a 2.10% increase. In spite of the sharp monthly rise, annual inflation dropped from 9.2% in September to 7.8%, its lowest level in a year, as the figure benefited from a favourable base effect. Although the monthly price rise was broad-based, it mainly reflected a sharp increase in prices for clothing and footwear as well as for housing, water, electricity and gas. The core inflation index, which excludes more volatile categories such as unprocessed food and energy, added 1.23% over the previous month (September: +0.34% month-on-month). Nevertheless, annual core inflation dropped from 8.0% in September to 6.6% in October. The Central Bank of Turkey (CBRT) recently revised its inflation forecasts and now sees inflation ending the year at 7.4% (previously expected: 6.2%) and moderating to 5.3% by the end of 2013 (previously expected: 5.1%). The official inflation target, however, remains at 5.0% for both years.