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ISTANBUL (Reuters) -Turkey’s monthly inflation rate is expected to be 2.83% in October, driven by hikes in clothing and food prices, while the year-end annual inflation forecast rose to 32%, a Reuters poll showed on Thursday.
The median estimate of ten economists showed monthly inflation, although remaining elevated, easing to 2.83% from 3.23% in September. Forecasts ranged from 2.7% to 2.9%. Year-on-year inflation median was almost flat when compared to 33.29% in September, forecasts ranged between 33% and 33.35%.
In September, monthly inflation was 3.23% driven by food, housing and education prices, exceeding expectations, as annual inflation rate jumped to 33.29%, marking the first rise in the annual rate since a peak touched May last year.
Economists said price hikes for clothing and unprocessed food due to a seasonal impact, as well as increases in automotive, energy and services inflation will impact October inflation.
Inflation is seen dropping to 32% by year end, according to the poll median, higher than the central bank target of 24% and its forecast range of 25-29%. In the poll conducted a month ago, the median of the year-end forecasts stood at 30%.
Earlier this month, Turkey’s central bank slowed its easing cycle with a 100-basis-point rate cut bringing the policy rate to 39.5%, citing a slowdown in the disinflation process.
In March, Turkish assets came under pressure, with the lira hitting a record low against the U.S. dollar after Istanbul Mayor Ekrem Imamoglu — President Tayyip Erdogan’s main political rival — was jailed pending trial on graft charges that he denies.
Market reactions to political uncertainty, agricultural frost and drought caused a slowdown in the disinflation path set out by the government and the central bank.
The central bank said that risks posed by recent price developments in food to the disinflation process have become more pronounced and vowed to maintain tight monetary policy stance.
The Turkish Statistical Institute will release October inflation data at 0700 GMT on November 3.