Turkey’s inflation up more than expected in May amid COVID-19 pandemic

Turkey’s consumer price inflation climbed more than expected to 11.39% year-on-year in May, the national statistical body said on Wednesday, rising against a background of slowing economic activity due to the coronavirus pandemic.

May’s annual inflation was up from 10.94% in April. Month-on-month, consumer prices rose 1.36% in May, Turkish Statistical Institute (TurkStat) data showed.

The median estimate in a Reuters poll of 15 economists for year-on-year inflation in May stood at 11%. The median forecast for monthly inflation was 0.95%, with 14 economists contributing.

A group of 18 economists polled by Anadolu Agency (AA) predicted annual inflation figures would drop to 10.90% in May.

Economists also predicted an average of 0.92% monthly increase in the consumer price index.

According to the TurkStat data, the lowest annual increase in inflation was 2.98% in communication.

Other main sectors seeing low annual increases were recreation and culture with 3.74%, transportation with 6.69%, and clothing and footwear with 7.68%, it said

On the other hand, larger rises were seen in alcoholic beverages and tobacco with 21.41%, miscellaneous goods and services with 20.86%, and housing with 14.45%.

The lowest monthly increase was 0.16% in hotels, cafes and restaurants, followed by health care with 0.22%, and food and nonalcoholic beverages with 0.24%.

This April the Central Bank of the Republic of Turkey (CBRT) revised its year-end inflation forecast to 7.4% for 2020, down from 8.2%, thanks to a cut in projections of the output gap and food inflation.

The government’s year-end inflation target is 8.5% for 2020 as laid out in the government’s new economic program announced last September.

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