ANKARA
Inflation in Turkey dropped sharply in June, the Turkish Statistical Institute reported on Friday.
The Consumer Price Index lost 0.51 percent in June from May, bringing the annual inflation rate to 7.20 percent in June from 8.09 percent in May.
The decrease was greater than analysts had forecast: 21 economists surveyed by Anadolu Agency had predicted inflation would fall to 7.55 percent in June.
The highest monthly decrease was 2.79 percent in food and non-alcoholic beverages -- these have been key drivers in inflation pressure this year, according to the Turkish Central Bank.
On a monthly basis, the cost of recreation and culture saw the highest price increases, with hotels, cafes and restaurants up 1.09 percent.
Despite the decline, analysts doubted that a further decline is in store.
“Despite the decline in headline inflation, the core inflation rate, which does not include food and energy, should continue to remain elevated through the end of the year,” economist Attila Yesilada of Global Source Partners said in an interview.
“Friday’s consumer price index data will be decisive for Turkish assets. The reason is hidden in the seasonal pattern of inflation,” commented Bora Tamer Yilmaz, an economist with Ziraat Securities in Istanbul, in a note published on Friday.
“So far in the first five months inflation has overshot its historic pattern due to food prices. Finally, after almost one-and-a-half years, food inflation has started to behave on the back of favorable weather conditions,” Yilmaz said.
“Historically for year-end food inflation June matters the most. Because, on average, in December prices are 6.4 percent higher compared to June. Therefore, if in June food prices revert to their historic level of 0.77 percent year-to-date inflation, year-end food inflation may edge up to 11.2 percent."
"That's 2.2 percent higher than the central bank has foreseen in their latest inflation report," Yilmaz added.
