Turkey’s inflation rate slightly declines

Turkish inflation eased slightly in February, falling below the 20-percent barrier for the first time in six months, the country’s statistical authority announced on Monday.

The consumer price index rose an annual 19.67 percent last month, down from 20.35 percent in January and marking the first monthly inflation rate under 20 percent since August. Food prices remained the biggest driver of inflation, with a 29-percent annual increase, also down slightly from 31 percent in January.

In the lead-up to March 31 local elections, consumer frustration with high food prices spurred Turkish President Recep Tayyip Erdoğan to denounce what he called food terrorism – hoarding and price hikes - and open government-run produce stalls offering cut-rate foodstuffs.

Turkey is in the middle of an economic downturn that has ripped into consumer demand and prompted the government to cut taxes and offer cheap loans via state-run banks. The economy shrank by a quarterly 1.1 percent in the three months to September and many economists expect negative growth to persist in the first quarter of this year.

The Turkish lira, which lost 28 percent of its value last year, has largely stabilised after a large interest rate hike by the central bank in September.
Alvaro Ortiz Vidal-Abarca, the chief economist for Turkey at the Spanish bank BBVA, told the Financial Times that the inflation data was going in the right direction, but stressed the need for Turkey’s central bank to keep rates on hold when it meets on Wednesday, to reinforce its credibility.