Central Bank stays calm amid high inflation

ISTANBUL - Hürriyet Daily News

Turkey’s Central Bank has said the latest depreciation of the Turkish lira has not yet affected the prices of essential goods, reflecting a tranquil stance on recent high inflation data.

In its latest inflation report published yesterday, the bank tracked down the causes of the June inflation data and shared its estimations regarding the future trajectory of prices.

Turkish inflation rose sharply in June on higher food prices, leading analysts to think this will probably lead to closer central bank monitoring of inflation expectations but no hike in interest rates yet.

The report recalled that consumer prices have surged by 0.76 percent in June pushing the annual inflation to 8.3 percent. “It is estimated that inflation will move downwards thanks to the recovery in unprocessed food prices in the upcoming months and the base effect of energy prices that will turn out positive,” it stated.

The rise in unprocessed food prices has been the driver of the increase of inflation in June, the Central Bank said, adding that the low base effect sourced by the energy prices might be also be partially responsible. The bank stuck to a forecast of 5.3 percent for year-end inflation and predicted that it would fall to 4.9 percent by the end of 2014.