Turkish inflation dips below 12% in March on cheap oil

Credit: REUTERS/MURAD SEZER

Adds breakdown of inflation, background

ISTANBUL, April 3 (Reuters) - Turkey's key inflation gauge fell to 11.86% in March as expected as a drop in global oil prices provided some relief after four consecutive months of rises, the Turkish Statistical Institute said on Friday.

In February, year-over-year consumer price inflation was 12.37% and it has remained lofty after a decline through much of last year. A Reuters poll forecast it would fall to 11.85% last month.

Turkey is nearly completely dependant on imports to meet its energy needs and a global drop in prices last month led to a 1.91% decline in transportation-related prices.

The coronavirus pandemic is expected to dramatically slow economic activity in Turkey and around the world, which could further ease inflation in the months ahead. On the other hand, a slide in the lira could keep import prices elevated.

A currency crisis in 2018 sent Turkish inflation surging to a 15-year high above 25%. But it has since declined and briefly touched single digits last year, allowing the central bank to cut interest rates to 9.75% from 24% in July.

Month-on-month, consumer prices rose 0.57% in March, compared to a poll forecast of a 0.55% rise. The producer price index rose 0.87% month-on-month for an annual rise of 8.50%, the data showed.

Overall, inflation was driven by health sector prices which rose 2.78% month-on-month, while food and non-alcoholic beverage prices were up 1.95%, the data showed.

MONETARY EASING

The central bank has eased more than analysts expected on the heels of a recession last year, and it has predicted inflation will drop towards 8.2% by year-end.

But the bank could lower that forecast after saying last month the dive in global energy prices affected the inflation outlook "favourably."

The price of brent oil has fallen to below $25 per barrel from $72 in the beginning of January, leading Turkey to cut petrol prices by 1.5 lira in March, and diesel oil prices by around 1 lira.

The lira TRYTOM=D3 was little changed after the inflation data, standing at 6.6850 against the dollar 0718 GMT. It has declined some 10% this year as the fallout from the coronavirus hit financial markets hard.

(Reporting by Ali Kucukgocmen; Editing by Jonathan Spicer)

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

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.