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POLL-Turkey's inflation seen rebounding to 11%, at 12% by year-end

Credit: REUTERS/MURAD SEZER

Turkey's inflation is expected to have returned to double digits in November due to the waning of a so-called base effect, which helped bring it down to a near three-year low in October, a Reuters poll showed on Friday.

By Ali Kucukgocmen and Ezgi Erkoyun

ISTANBUL, Dec 3 (Reuters) - Turkey's inflation is expected to have returned to double digits in November due to the waning of a so-called base effect, which helped bring it down to a near three-year low in October, a Reuters poll showed on Friday.

Inflation surged to a 15-year high in October 2018, when it shot up above 25% in the wake of a currency crisis. The central bank hiked its policy rate to 24%, which along with weak domestic demand and base effects, helped curb inflation. Annual inflation had slowed to 8.55% by October this year.

The median estimate in a Reuters poll of 15 economists stood at 11% for annual inflation in November. Estimates ranged between 11.4% and 10.4%.

Month-on-month inflation was expected to stand at 0.7%, with forecasts between 0.96% and 0.24%.

With food and clothing prices rising due to seasonality as well as a negative base effect, inflation could return to double digits in November, said Okan Ertem, senior economist at TEB, adding that the rise was largely based on temporary factors.

"However, the marked downward trend in core inflation, which excludes food and energy prices, is continuing," he said.

Turkey's central bank, which sets its policy rate to yield what it says is a "reasonable" real interest rate, has cut its policy rate by 10 percentage points this year to boost economic activity as inflation declined. It has estimated year-end inflation at 12%.

"As long as the downward trend in core inflation, which the central bank follows closely, continues to be seen, we could end the year below 12%," he said, adding that this would provide the right conditions for the central bank to cut rates in its December meeting.

The median estimate in the Reuters poll for 2019 full-year inflation was in line with the central bank estimate of 12%, with forecasts ranging between 12.5% and 10.9%.

President Tayyip Erdogan urged the central bank on Tuesday to continue slashing interest rates, saying both rates and inflation would hopefully hit single-digits next year.

Turkey's Statistics Institute is expected to announce November inflation data at 0700 GMT on Dec. 3.

(Reporting by Ali Kucukgocmen; Editing by Gareth Jones)

((ali.kucukgocmen@thomsonreuters.com , @alikucukgocmen; +902123507067; Reuters Messaging: Reuters Messaging: ali.kucukgocmen.thomsonreuters.com@reuters.net))

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