The annualized CPI was 6.65 percent as of August, and the central bank was expecting September’s CPI to be 6.17 percent.
Turkey’s consumer price index (CPI) rose 0.75 percent month-on-month in September, compared to a forecast increase of 0.68 percent, making the annualized CPI rate 6.15 percent, the Turkish Statistics Institute (TurkStat) said on Monday.
The annualized CPI was 6.65 percent as of August, and the central bank was expecting September’s CPI to be 6.17 percent. Observers said the latest slight increase in inflation is not expected to make much of a difference in the central bank’s year-end inflation targets.
The producer price index (PPI) also rose, at a higher rate of 1.55 percent in September, making annualized inflation in the PPI 10.03 percent. In the first nine months of 2011, the CPI rose 4.53 percent and the PPI increased by 9.72 percent.
Ata Investment chief economist Nurhan Toğuç said September’s inflation was in line with market expectations, adding, however, that pundits anticipate an increase in inflation in the months to come, albeit a slow one. Speaking to the Anatolia news agency in İstanbul on Monday, Toğuç said the beginning of the new school year did not lead to much of an increase in inflation. The back-to-school season traditionally brings with it price increases in Turkey, especially in the ready-wear clothing and office supplies sectors.
Toğuç attributed the anticipated increase in inflation in the coming months to possible hikes in electricity and natural gas prices through the end of the year. The unit price for electricity rose 9.57 percent at the beginning of this month. Government officials have hinted at a possible price increase of around 15 percent in natural gas as well.
Further rate cuts likely
With inflation not posing a serious threat to the country’s economy, the Central Bank of Turkey has more maneuvering room to press for further interest rate cuts to support economic growth, at a time when fears of a second round of global financial turmoil mount, with the US and European nations failing to develop effective measures to counter staggering debt issues at home.
“It seems as though the [Turkish] central bank will continue with its growth-based policy in the days ahead,” said economist Gülay Elif Girgin from Oyak Investments on Monday, also in remarks to Anatolia. The Central Bank of Turkey has lowered its benchmark short-term repo rate multiple times since late last year. In its latest such move, the bank slashed the one-week repo rate, or policy rate, by 50 basis points to 5.75 percent in early August.
Cihan news agency
03 October 2011 Monday