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Turkish inflation dips below expectations in July, currency firms: report

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Turkey’s consumer price inflation fell to a lower-than-expected 11.76 percent year-on-year in July, official data showed on Tuesday, reversing two months of rising inflation as the economy continued to emerge from lockdown, according to Reuters.

The figures boosted the lira, which firmed to 6.9270 against the dollar. The currency weakened last week to 7 on lingering worries over depleted FX reserves and costly state interventions to steady the currency.

Month-on-month, consumer prices rose 0.58 percent in July, the Turkish Statistical Institute (TurkStat) said, compared to a Reuters poll forecast of 0.9 percent. The poll saw annual inflation at 12.10 percent in July, after it rose to 12.62 percent in June.

The largest consumer price rises in July were in the transportation sector, with a rise of 2.44 percent, while clothing and footwear prices dropped 3.48 percent. Key food and non-alcoholic drinks prices dropped 1.28 percent, the TUIK data showed.

Economists had cited coronavirus-related disruptions to production as contributing to the expected dip in year-over-year price rises.

The Turkish central bank, which has held its policy rate at 8.25 percent since June citing rising prices, last week raised its year-end inflation forecast to 8.9 percent from 7.4 percent.

As pandemic-related demand for goods gradually eases and things return to normal “inflation will enter a falling trend beginning in July,” the bank’s governor Murat Uysal said.

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