August inflation up due to food and oil

ISTANBUL

Turkish inflation slowed to 8.88 percent in August, the national statistics institute TÜİK said yesterday.
On a monthly basis consumer prices increased by 0.56 percent, which brought annual consumer price inflation down to 8.88 percent from 9.07 percent in July.

The monthly producer price inflation dropped to 4.56 percent, from 6.13 percent seen the previous month, TÜİK reported. On a sector basis, agriculture sector prices were up 11.43 percent from August 2011, but down 0.75 percent from last month, while manufacturing prices registered a 3.29 percent increase year-over-year and a 0.46 percent increase from July.

‘Year-end inflation at 6 pct’
The largest price increase was seen in food, specifically apricot prices, which shot up 17.99 percent from the month before, followed by cucumbers with a 16.41 percent month-over-month increase and LPG prices with a 9.93 percent increase.

Economy Minister Zafer Çağlayan predicted yesterday that the Turkish inflation would not be higher than the government’s expectations.

“I estimate Turkey will finalize the year with a six percent inflation rate,” he said. Turkey’s medium-term inflation expectation is 5.2 percent and Çağlayan added that although they would not be able to achieve the 5.2 percent target, the six percent inflation rate would not be too far off track.

Meanwhile, Ata Yatırım’s Economist Özlem Derici told Anatolia news agency that August’s CPI figures, which were exceeded market expectations, came on the back of higher food and energy prices, but that annual inflation falling from 9.07 percent to 8.88 percent was a positive signal. She did, however, stress that the increase in oil prices was an upside risk.

‘Can fall to 5.5 pct in 2013’
Oyak Yatırım’s Economist Gülay Elif Girgin also told Anatolia news agency that the rise in August inflation was due to a rise in food prices.

“In addition, with the latest hike in oil prices, we see a monthly rise in transportation prices and this combination has led to an increase in August inflation,” she said.

“Generally speaking our year-end expectations are 8 percent and the Central Bank’s is 6.2 percent, so the August figure is no surprise. Besides, the Central Bank had already warned of increasing food and oil prices in the coming period,” she said.

Garanti Yatırım economist Gizem Öztok said that she believed inflation would reach the 5.5 percent level by April 2013 and that even though August inflation was higher than expected it was in the acceptable range and the overall downward trend was continuing.