Inflation falls below 9 percent on back of tobacco and food prices

ANKARA

Wine prices dropped 3.5 percent in September, the official figures say.

Turkish inflation dropped under 9 percent in September for the first time in five months, beating the market expectations, during the month before the hike in gas and electricity prices are implemented.

A nearly 1 percent drop in tobacco products, an important indicator in the country’s inflation calculation basket, in addition to a 3.5 percent fall in wine, played a role in the downward move. The food prices in general terms supported the fall.  The consumer price index (CPI) increased by 0.14 percent in September, the state-run statistics body TurkStat’s report said Oct. 3.

“A rise … occurred in the CPI from the previous month, by 0.14 percent,” said the report.

Estimates by 22 economists, previously surveyed by Anadolu Agency, had been
established at 0.48 percent, the average increase in consumer prices. The annual inflation, which was predicted to be 9.23 percent in same survey, was actually 8.86 percent, TurkStat said.

The inflation figures have been closely observed by markets for months, since the Turkish Central Bank vowed to maintain interest rates until it noticed clear signs of recovery in the inflation outlook.

Leading government officials and the Bank have been at odds over the rates, with Economy Minister Nihat Zeybekci arguing that the high interest rates were suppressing economic growth in the country.

However, Finance Minister Mehmet Şimşek has been backing the Bank’s policy. The drop gave the Central Bank some room to manoeuvre around its tight monetary policy.

Electricity and natural gas prices in the country will be increased by 9 percent as of October, Energy Minister Taner Yıldız said Sept. 30, ending months of speculation over the possibility of hikes.