Turkey’s inflation may slow on oil price decline – poll

Turkey’s consumer price inflation may slow in March, driven down by falling global oil prices, according to a Reuters poll.

Consumer price inflation in the country may ease to 11.85 percent from 12.37 percent in February, Reuters said, citing a survey of 14 economists. Forecasts ranged from 11.3 percent to 12.34 percent, it said.

Turkey’s inflation rate has remained elevated at around 12 percent over the past three months after the central bank slashed interest rates to single digits. Turkey’s benchmark lending rate had stood at 24 percent last July.

Monthly inflation was seen at 0.55 percent, Reuters reported.

The decline in oil prices – Turkey imports almost all the energy it consumes – and a slowdown in economic activity may contribute to the central bank achieving single-digit inflation in the second half of the year, Reuters said, citing comments by GCM Investment.

Inflation at the end of the year may be 9.6 percent, according to the median estimate of 11 economists who took part in the Reuters poll. The central bank predicts annual price increases of 8.2 percent by the year-end.

But inflation is under pressure from a decline in the value of the lira, which has reached about 10 percent since the start of the year. Manufacturers are increasing their prices after input costs climbed and supply shortages increased, the Istanbul Chamber of Industry and IHS Markit said in a monthly survey of manufacturing activity published on Wednesday.

Turkey’s Purchasing Managers’ Index (PMI) slumped to 48.1 points last month from 52.4 in February. Any reading below 50 points reflects a contraction in activity.

The Turkish Statistical Institute will announce March inflation data on Friday.