Turkey's retail sales contract for first month since January

Turkey’s retail sales dropped on a monthly basis for the first time since January in a sign that higher living costs are hurting consumer demand.

Sales volume declined by 0.7 percent in June compared with May, led by a 9.6 percent drop in automotive fuel sales, the Turkish Statistical Institute said on its website on Friday.

An annual increase in retail sales of 5.5 percent was the slowest since March, the figures showed. It compared with an expansion of 21.2 percent in May and 15.2 percent in April.

Turkey’s government has ordered the central bank to cut interest rates to help stimulate economic growth and demand. But the policy has led to a flight of capital from the lira, pushing the currency to a record low in December, and a surge in inflation -- consumer prices rose by an annual 79.6 percent in July, the fastest pace of increase since 1998.

In a separate statement, the statistical institute said industrial production in Turkey grew by an annual 8.5 percent in June. That was the slowest increase since January’s 7.6 percent. Production expanded by 1.3 percent month-on-month, the fastest pace of gains since February.

Higher interest rates on consumer loans are paring demand for products and services in Turkey. The average annual cost of a personal loan stood at 34.5 percent as of Aug. 5 compared with 29.6 percent at the end of 2021, according to central bank data.

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