September 30, 2019 / 1:44 PM / 16 days ago

Turkey's inflation seen tumbling briefly to single digits in September: Reuters poll

ANKARA (Reuters) - Turkish inflation is expected to fall sharply in September to 9.6%, a Reuters poll showed on Monday, hitting single digits for the first time in more than two years thanks to a “base effect” after prices surged in the same month last year.

FILE PHOTO: People shop at a bazaar in Istanbul, Turkey, May 29, 2019. REUTERS/Murad Sezer

Inflation is expected to rebound toward year end after the expected drastic fall in September.

In the same month a year ago, inflation surged to 24.5% as Turkey’s currency crisis took hold. It hit a 15-year high of more than 25% in October last year, and the lira lost nearly 30% of its value against the dollar.

High interest rates and slower demand has dragged inflation lower since last fall and it stood at just above 15% in August.

The median estimate for September annual inflation in the Reuters poll of 15 economists stood at 9.6%, with estimates ranging between 10.60% and 9.10%.

The median estimate for the monthly inflation rate stood at 1.30%, with forecasts between 2.25% and 0.8%.

“There will be a sharp decline in inflation on an annual basis. The reason for this is the extraordinary rise last year being removed from the equation and a lower rate replacing it,” said Nilufer Sezgin, chief economist at Is Portfoy.

She added that inflation could fall further in October due to the base effect, but that it is expected to rise in the following two months to end the year at 12.5%.

The expected September decline should be supported by minimal increases in food and clothing prices, Sezgin added.

The median estimate for inflation at year-end stood at 13.30%, with estimates ranging between 14.10% and 11.10%.

Finance Minister Berat Albayrak announced Turkey’s revised economic forecasts on Monday showing that inflation is expected to stand at 12.0% this year and 8.5% next year.

Turkey’s Statistical Institute is expected announce September inflation data at 0700 GMT on Oct. 3.

Writing by Ali Kucukgocmen; Editing by Jonathan Spicer

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