The Turkish Central Bank on Aug. 19 predicted a 'noticeable increase' in the inflation rate for the month, caused by a jump in the price of fruit and other foods. AA photo
Turkey’s inflation rate rose to 8.3 percent in August, reversing a three-month drop as food prices increased.
Inflation accelerated from 7.6 percent the month before, the Turkish Statistical Institute, or TurkStat, said on its website Friday. It was forecast at 8 percent, according to the median estimate of four economists surveyed by Bloomberg. In the month, prices rose 0.4 percent.
The Turkish Central Bank on Aug. 19 predicted a “noticeable increase” in the inflation rate for the month, caused by a jump in the price of fruit and other foods. The bank’s governor, Durmuş Yılmaz, has kept the benchmark interest rate unchanged at 7 percent since November, even as the economy returned to growth after the global crisis, saying the core inflation rate is falling toward the year-end target of 6.5 percent.
“We will probably reach 9 percent by the end of September, but we are expecting a decline from there,” said Sengül Dağdeviren, head economist at ING Bank in Istanbul, before the figures were released. “The central bank has been warning markets about this increase beforehand and says it’s temporary.”
Yields on benchmark two-year lira bonds fell 5 basis points to 8.09 percent as of 10:05 a.m. in Istanbul, according to an ABN Amro index. The lira was little changed at 1.511 per dollar.
The central bank is unlikely to change interest rates and could resort to other tools instead to stem a rise in inflation, such as increasing reserve requirements to control credit growth, Dağdeviren said.
Turkey’s economic rebound, which began in the second quarter of last year, has slowed in 2010 and the central bank has warned of persisting risks to the recovery. Quarterly growth dropped to 0.1 percent in the three months through March.
The bank’s preferred measure of core inflation, which excludes energy and food prices, fell to 4.2 percent in August from 4.5 percent a month earlier, TurkStat said.
The cost of goods leaving Turkish factories and mines rose 9 percent in the 12 months through August, compared with 8.2 percent a month earlier, the agency said. Producer prices rose 1.15 percent in the month.