Turkish inflation lower than expected in May at 18.7 percent

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Turkey's inflation police visits supermarkets to check the prices regularly. PHOTO: Bloomberg

Turkish inflation eased to a lower-than-expected 18.71 percent in May, official data showed on Monday, causing the lira to decline as investors worried that the central bank may lower its policy rate earlier than expected, Reuters reported.

In the wake of last year’s currency crisis, which erased nearly 30 percent of the lira’s value against the dollar, overall inflation peaked at a 15-year high above 25 percent in October before gradually slipping to 19.50 percent in April.

Economists surveyed by Reuters had expected inflation to be at 19.10 percent in May.

Month-on-month, inflation stood at 0.95 percent in May, lower than the poll forecast of 1.3 percent. The producer price index rose 2.67 percent month-on-month for an annual rise of 28.71 percent, data from Turkish Statistical Institute (TurkStat) showed.

Inflation in May was pushed lower by falls in prices for household goods, which declined 1.58 percent, and food and non-alcoholic beverages, which dropped 1.18 percent, TurkStat said.

The largest rise was in alcoholic beverages and tobacco prices, which rose 8.88 percent, it said. Clothing and shoe prices rose 4.09 percent. The median estimate in the Reuters poll showed inflation is expected to stand at 16.0 percent at the end of 2019, slightly above the government’s estimate of 15.9 percent.

Finance Minister Berat Albayrak, who is President Recep Tayyip Erdoğan’s son-in-law, said that the declining trend in inflation is continuing and added that Turkey will hopefully achieve its year-end targets.

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