The consumer price index (CPI) in Turkey fell 0.51 percent in June, taking the annual inflation rate to 7.20 percent from 8.09 percent in May, dropping more than expectations.
Unlike previous months, food inflation has retracted in June and supported the decline in monthly figures. After one and a half years of rising prices, food and non-alcoholic beverages recorded the highest monthly decrease by 2.79 percent. According to the Turkish Central Bank, these have been key drivers of inflation pressure recently.
On the other hand, on a monthly basis the cost of recreation and culture saw the highest price increases, with hotels, cafes and restaurants up 1.09 percent.
At the end of April, Turkey’s Central Bank Governor Erdem Basci raised his year-end inflation forecast to 6.8 percent from 5.5 percent. Basci cited a weak lira, rising food prices and higher than expected oil prices as main causes of his forecast update. He added “cautious monetary policies” will remain until desired levels in inflation are reached.
However, besides being criticised due to applied tight monetary policies, Basci was also criticised for increasing the bank’s inflation prediction for the year end.
Analysts do not expect the central bank to change its policies based on June’s inflation figures.