Turkish inflation in April lower than expected

ANKARA (Combined reports) – Turkish consumer price inflation (CPI) was a monthly 2.1 percent in April for an annual rate of 29.5 percent, lower than market expectations, official data showed on Saturday. The data support the central bank’s arguments on April 25, when it cut interest rates to 41 percent from 44 percent, saying it was «cautiously optimistic» over future inflation. Turkey’s budget, agreed with the International Monetary Fund under a $16 billion loan deal, sees year-end CPI falling to 20 percent. The WPI target is 17.4 percent. The State Statistics Institute said on Saturday that wholesale inflation (WPI) was a monthly 1.8 percent in April, also below predictions, and reached 35.1 percent year-on-year, compared with 35.2 percent in March. Consumer price inflation in March was 3.1 percent month on month and wholesale price inflation 3.2 percent. Core inflation, defined as private sector manufacturing prices, rose only 0.7 percent, compared with a forecast of 1.5 percent in the poll. Inflation had been higher than expected in the first three months of the year, largely because of the impact of bad weather on grocery prices and because of oil price rises in the leadup to the war in Iraq. The central bank says it believes both of those factors have now faded and that inflation will resume a downward trend. It may still be difficult for the government to meet this year’s inflation target of 20 percent. The target is in line with the IMF-backed economic recovery program. The IMF loans aim to help Turkey’s economy recover from a crippling recession in 2001. (Reuters, AP)