Turkish inflation falls to 20.3% in December

ANKARA, Jan 3. Turkish inflation dropped for the second month in a row, to an annual rate of 20.3 percent after hitting a 15-year high in October, official statistics showed Thursday.

Thousands of Turks protested in Istanbul last month against crippling inflation as the economy struggled following a currency crisis in August.

The government launched an “all-out fight against inflation” as the lira fell by more than 28 percent in value against the dollar in 2018.

In October, consumer prices were 25.24 percent higher than in the same month a year earlier, the highest level since 2003.

That figure eased to 21.62 percent in November and the level in December was below a Bloomberg forecast of 20.5 percent though still far above the central bank target of five percent.

On a monthly basis, consumer prices eased in December by 0.4 percent, the Turkish statistics office (TUIK) said.

But compared with a year earlier, furnishing and household goods were 31.36 percent more expensive, while food and non-alcoholic drinks were up by 25.11 percent, TUIK data showed.

The lira stood at 5.44 against the US dollar after the figures were released, gaining nearly 2.8 percent in value on the day.

In early January 2018, it took around 3.75 lira to buy one dollar. Turkish Finance Minister Berat Albayrak has said the fight against inflation will continue through the first three months of 2019, and include cuts on a special consumption tax and value added tax.

The Union of Chambers and Commodity Exchanges of Turkey (TOBB) head Rifat Hisarciklioglu urged the private and public sectors to cooperate in the battle against rising prices.

“Neither the public nor the private sector can do this alone. The responsiblity and duty is all of ours,” he said Wednesday.

The focus now shifts to the central bank and whether it will cut interest rates when its monetary policy committee meets on January 16. In September, the central bank raised its main interest rate, the the one-week repo rate, by 6.25 percentage points to 24 percent.

President Recep Tayyip Erdogan has criticised such hikes, going against economic orthodoxy to claim that higher rates fueled inflation. He described them at one point as the “mother and father of all evil”.