ISTANBUL (Reuters) – Turkey’s inflation rate dropped to single figures in September for the first time in more than two years, data showed on Thursday, giving the central bank more room to cut interest rates further.
The consumer price index fell to 9.26% year-on-year, the Turkish Statistical Institute said, well down from 15.01% in August due to temporary measurement “base effects”, and below a Reuters poll forecast of 9.6%.
Prices - Year - Turkey - Currency - Crisis
Prices spiked a year ago as Turkey’s currency crisis took hold and tipped the economy into recession.
Inflation is expected to rebound by the end of this year to around 12-13%, but still leaves room for the central bank to ease policy a bit more after it slashed interest rates by 750 points since late July to 16.50% three weeks ago.
Figures - President - Erdogan - Pressure - Bank
“These figures mean that President Erdogan is likely to keep up the pressure on the central bank for further large interest rate cuts,” said Jason Tuvey of Capital Economics.
Analysts expect one or two modest cuts in interest rates by the end of the year.
Consumer - Inflation - % - September - Reuters
Month-on-month, consumer inflation stood at 0.99% in September, well below a Reuters poll forecast of 1.3%. The largest price drops were in food and non-alcoholic drinks, the statistical institute said.
The Turkish lira – which plunged nearly 30% in 2018 and is down another 7.5% this year – strengthened by 0.2% after the inflation report and stood at 5.7080 against the dollar at 1303 GMT.
Inflation - September - Year - % - October
Inflation surged in September of last year and hit a 15-year high above 25% in October, before gradually easing. The government expects it to fall to 8.5% by the end of next year, and help the economy...
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