Economy Turkey: Consumer prices to fall this year: analysts

Turkey: Consumer prices to fall this year: analysts

Burgan Securities Chief Economist Haluk Burumcekci
Burgan Securities Chief Economist Haluk Burumcekci

(AA) – Analysts expect further improvement for Turkey’s consumer price inflation in 2015, after better-than-expected December figures were announced by officials on Monday.

“We believe the downwards trend in consumer prices will continue in 2015,” Burgan Securities Chief Economist Haluk Burumcekci told The Anadolu Agency on Monday.

Better-than-expected inflation figures are largely attributable to the decline in transport costs due to the sharp drop in oil prices, and the similar decrease in clothing and footwear, Burumcekci explained.

The central bank is expected to maintain its current tight monetary policy in the near future, despite the downward move for inflation and positive signs supporting economic recovery, Burumcekci noted.

Chief Economist of Odeabank Inanc Sozer pointed out that the 0.44 percent drop in consumer prices in December is the largest monthly decrease seen in the last two and a half years. Inflation may drop to 5 percent by the middle of 2015, Sozer predicted.

“Despite the recent tax hikes, we forecast that annual inflation will fall below 7 percent in January, and that inflation will improve significantly after the drop in oil and food prices starts to take effect,” Sozer said.

Sozer added that, in the second half of the year, inflation may even decline to below 5 percent, and predicted that 2015 year-end inflation would be near that level.

The Turkish Statistical Institute announced that the monthly inflation rate in Turkey unexpectedly declined in December, hitting a ten-month low of 8.17 percent calculated as a moving average of the past 12 months.

The last figure is significantly lower than the Central Bank of Turkey’s year-end inflation forecast of 8.9 percent, which was released in a report on Oct. 31.