Turkish inflation at its 'worst' before expected slowdown

Turkey’s consumer inflation rose 0.4% from April to May, bringing the year-on-year increase to 9.66%, the highest level in 25 months. The data, announced earlier this week, was hardly a surprise since the Central Bank had already warned that May inflation would be the “worst.” The markets had even braced for 9.78%, but a 1.35% monthly decrease in food and non-alcoholic beverages amid declining fruit and vegetable prices contained the rise. Prices of green pepper, tomato, sweet pea and eggplant, for instance, fell by 25% to 52%.

The monthly inflation in producer prices was down 0.52% in May. Core inflation — known also as “real inflation” for being stripped from seasonal and external effects — increased 1.5% in the same period, bringing the year-on-year rate to 9.77%, the highest in the last seven years.