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Turkey’s annual inflation falls below 20 percent for first time since August

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Annual Turkish consumer inflation fell to 19.67 percent in February, official data showed on Monday, dropping below 20 percent for the first time since August as food price inflation eased following a government price-cutting campaign, Reuters reported.

Economists said the decline was not sufficient to prompt an immediate interest rate cut by the central bank, which is expected to leave key rates unchanged at its policy-setting meeting on Wednesday.

Finance Minister Berat Albayrak hailed the February data as showing the success of state sales of cheap vegetables last month and said there will be a significant fall in inflation from this summer due to structural measures on food prices.

“Despite a negative seasonal impact, food inflation remained below expectations, showing the success of the regulated sales decision in curbing food prices,” Albayrak wrote on Twitter.

Month-on-month consumer price inflation was 0.16 percent in February. Economists in a Reuters poll had forecast an annual rate of 19.9 percent, down from January’s 20.35 percent.

“We fully believe we will end 2019 with a better performance than targeted and will reach our single-digit inflation targets sooner than expected,” Albayrak added. Under its medium-term program, the government sees end-2019 Consumer Price Index (CPI) of 15.9 percent.

Announcing the bank’s quarterly inflation report at the end of January, Central Bank Governor Murat Çetinkaya said the bank will maintain its tight monetary stance until it is convinced that inflation is falling.

Food and non-alcoholic beverage prices rose 0.90 percent month-on-month in February, down from 6.43 percent in January. The biggest February price drop was in clothing, where prices fell 4.81 percent, while health sector prices rose 2.48 percent.

The government last month opened low-priced produce market stalls in Turkey’s biggest cities Istanbul and Ankara to fight what officials called “food terror,” saying they would punish anyone trying to keep prices artificially high.

Speaking ahead of local elections on March 31, President Recep Tayyip Erdoğan said on Saturday inflation would fall to 6 or 7 percent but did not specify a timeline for the goal.

Data on Monday showed the trade deficit tumbled 62 percent in February to $2.19 billion, with imports sliding 16.6 percent, illustrating the slowdown in economic activity.

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