World Bulletin/News Desk
Inflation was higher in Turkey in October, and rising food prices were a principal driver, according to figures of the Turkish Statistical Institute, TurkStat, released on Monday.
Consumer prices rose 1.9 percent in October compared with the previous month, bringing the annual inflation rate to 8.96 percent, said TurkStat.
Food prices were up 2.65 percent compared with the previous month, 12.56 percent year-on-year, in October, the Institute said.
The figure is slightly above the Central Bank’s year-end forecast of 8.9 percent. This suggests that the higher inflation forecast shared in government’s medium term economic program is more probable than Central Bank’s forecast.
During the announcement of Medium Term Economic Program on October 8, Deputy Prime Minister responsible for the economy, Ali Babacan announced a forecast of 9.4 percent year-end inflation this year and 6.3 percent and 5 percent for 2015 and 2016 respectively.
In last Medium term Economic Program, the government cut the 4 percent growth target of 2014 to 3.3 percent and the 6.9 percent target of CAD/GDP ratio (current account deficit to Gross Dometic Product) to 5.7 percent -- this forecasts slightly slower economic growth.
Some analysts say that seasonal effects are helping to push inflation higher.
"High food prices alongside the hikes in energy prices and clothing due to seasonal effects delay the recovery in inflation outlook,“ said Inanc Sozer, Economic Research director at Odeabank.
Sozer sees the tight monetary stance of the Central Bank as a positive factor for inflation, but added that he still maintains inflation forecasts of 9.3 percent for 2014 and 6.7 percent for next year.
Chief economist of Halk Investment Banu Kivci Tokali said that uncertainty over food prices poses a significant risk for the inflation despite the positive effect of moderate energy prices.
“We preserve our 9.2 percent year-end inflation forecast. But in first half of 2015, inflation may recede to 7-8 percent range thanks to more moderate energy prices,” Tokali said.
“However uncertainty regarding the food prices poses the most important risk for this possible drop in inflation.”
Inflation figures present a dilemma for Turkey since the Turkish Central Bank has vowed to maintain high interest rates until it noticed clear signs of recovery in the inflation outlook, while government officials complain that high interest rates are limiting economic growth.
Last Mod: 03 Kasım 2014, 23:56