Turkey inflation unexpectedly accelerates in May, straying from forecast

Turkey’s annual inflation accelerated to 11.4 percent in May, straying away from the central bank’s year-end forecast.

The consumer price inflation rate climbed from 10.9 percent in April, the Turkish Statistical Institute said on Wednesday. Surveys of economists conducted by Bloomberg and the state-run Anadolu news agency had predicted little change.

Turkey’s central bank has slashed interest rates over the past 10 months to help stimulate economic growth, leaving the benchmark rate at 8.25 percent compared with 24 percent previously. At the same time, it has lowered its estimate for inflation this year to 7.4 percent, giving it more room for rate cuts and other monetary easing.

Inflation in May was led by an increase in the price of food, housing, alcohol and tobacco, with the cost of the latter two items increasing by a combined 21 percent after the government hiked taxes. Food and non-alcoholic beverage prices rose by 12.9 percent and housing by 14.5 percent. The cost of miscellaneous goods and services increased by an annual 20.9 percent.

On a monthly basis, consumer prices across the economy increased by 1.36 percent compared with April.

Producer price inflation slowed to an annual 5.5 percent in May from 6.7 percent in April, the institute said. Prices rose 1.54 percent month-on-month.