Tomatoes become game-changer in Turkey’s easing inflation rate

ANKARA

Turkey’s consumer price inflation eased at a faster-than-expected pace in June to the lowest level in four months, with a significant decrease in food, clothing and transport prices, data from the Turkish Statistical Institute (TÜİK) showed on July 3.

Monthly inflation was down with a decrease of 0.27 percent in June compared to the previous month. The annual consumer price index eased to 10.9 percent year-over-year in June, slower than the 11.7 percent spike in May. 

The annual rate hit 11.87 percent in April, an eight-year high, mainly due to the then-ongoing increases in food prices and the impact of the loss in Turkish Lira’s value across several sectors. 

June inflation was the weakest since February, when prices had grown 10.1 percent. 

The highest monthly decrease was 1.25 percent in clothing and footwear in June, according to TÜİK data. In June 2017, the indices declined for food and non-alcoholic beverages 1.06 percent and for transportation 0.84 percent, TÜİK data showed. 

The share of food and non-alcoholic beverages is the highest in Turkey’s inflation basket, with a 21.77 percent share in total, the prices of this group regressed more than 1 percent in June compared to the previous month.  

The price of one kilo of tomato, which was the price hike champion a couple of months ago, saw a 42 percent decrease in June compared to the previous month. Prices of many other fresh fruits and vegetables also declined.

Commenting on the inflation rate, Enver Erkan, an analyst at KapitalFX, said the fundamental factor in the data was the decline in food and non-alcoholic beverages prices.        

“Most of that came from seasonal effects. We see the effects of measurements taken by the Food Committee in the upcoming months. The food supply will be supported by imports in the short term, in order to control the prices,” Erkan explained, as quoted by state-run Anadolu Agency. 

He also said domestic food production had been positively affected, thanks to good weather conditions, including rain in May and June.      

The highest annual increase was, however, again in alcoholic beverages and tobacco with a 21.7 percent annual increase, according to TÜİK data. 

This was followed by food and non-alcoholic beverages with 14.34 percent, transportation with 14.07 percent, and health with 12.66 percent.