Disinflation in Turkey slows in September

Although annual inflation in Turkey fell in September, it did so more slowly than in previous months, according to official data published today (October 3).

Annual consumer price index (CPI) inflation slowed to 49.38%, down from 51.97% the previous month. The 2.59 percentage points reduction was significantly lower than the 9.81 points decline between July and August.

Month-on-month inflation rose to 2.97% in September, up from 2.47% the previous month.

The housing sector witnessed the largest rise in prices, which increased by 97.87%. The education sector came in second with annual inflation of 93.59%. This was also the sector with the highest increase on a monthly basis, with prices having risen by 14.21% between August and September.

The Central Bank of the Republic of Turkey last month held its key interest rate at 50% for the sixth consecutive time. At the time, its expectation was that annual inflation would fall to 38% by the end of the year. The bank also raised its reserve ratio requirement for lira deposits to support the monetary policy transmission mechanism.

ING said in a note that the slowdown in deflation meant a rate cut would only materialise in November if this month’s inflation data brought “a significant positive surprise”.

Ena-grup, an Istanbul-based consultancy that specialises in assessing inflation, estimates that annual inflation in Turkey was 88.63% in September. Steve Hanke, a professor of applied economics at Johns Hopkins University in the US, puts the figure at 28%.