Turkish consumer price inflation accelerated last month as food prices jumped, keeping the pace of annual price increases above 9 percent for a fourth month.
The annual inflation rate climbed to 9.32 percent in July from 9.16 percent the previous month, according to a statement by Turkey’s state statistics institute in Ankara. Economists were expecting CPI to slow, led by a fall in food prices. The median estimate in a Bloomberg survey of 17 economists was 8.9 percent. The average price of food and non-alcoholic beverages rose 12.56 percent in July from a year ago, compared with 12.47 percent in June, according to Turkstat.
Central Bank Governor Erdem Basci didn’t rule out further rate cuts policy during a speech last month, saying that volatility in food prices is behind the bank’s failure to meet its year-end inflation target of 5 percent. Basci, who lowered the cost of borrowing for three consecutive meetings through July, said the market was “pricing” another 50 basis point cut to rates over the next three months.
“Sustained inflation is clearly not supportive of further Turkish central bank cuts and limit the amplitude of policy easing in the coming months,” Ipek Ozkardeskaya, a currency strategist at Swissquote Bank SA in Geneva, said by e-mail today.
The lira reversed earlier gains after the data and was trading 0.1 percent lower at 2.1363 per dollar at 10:50 a.m. in Istanbul. Yields on two-year notes climbed 27 basis points to 9.01 percent, the highest on a closing basis since May.
The core inflation rate, which strips out volatile items including food, gold and energy, climbed to 9.75 percent in July, near the seven-year high of 9.77 percent seen in May. The monthly inflation rate was 0.45 percent, compared with the median estimate of 0.08 percent in a Bloomberg survey of 14 economists before the data was published.
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