ECONOMY

Turkish inflation to meet ’04 goal

ISTANBUL – Turkish inflation is expected to remain on course to meet the government’s year-end target in June, but its level will depend on the impact of rising oil prices and a weakening of the lira currency, analysts said. Turkey’s official year-end inflation target under its $19 billion International Monetary Fund program is 12 percent. A Reuters poll of 25 bank and brokerage analysts showed the consumer price index (CPI) was on average expected to rise 0.29 percent month-on-month in June, while the wholesale price index (WPI) was forecast to fall 0.03 percent. A year earlier, WPI fell 1.9 percent and CPI fell 0.2 percent in June. The lira has weakened as much as 12 percent against the dollar since early April amid poor investor sentiment toward emerging market assets. «June will be the second month after May to see the impact of exchange rates on price levels… how much they are reflected in prices and whether they have left a lasting effect,» Disbank economist Erkin Isik said. Turkey raised oil product prices on May 18 to keep a year-end public sector primary surplus target of 6.5 percent. The government raised directly controlled prices of gasoline, heating oil, fuel oil and all other refined oil products by nearly 5 percent amid surging world oil prices. The State Statistics Institute is to release the data for June on July 3. Closely watched core inflation, which covers private sector manufacturing sector prices, was expected to rise 1.17 percent. Official data in early June showed CPI rose by 0.38 percent month-on-month in May for an annual rate of 8.88 percent, far below market expectations and the year-end target. May WPI fell 0.03 percent month-on-month, giving an annual 9.56 percent rise. Taming chronically high inflation is a central pillar of the IMF deal, inked in 2002 after a financial crisis. A regular central bank survey showed last week that expectations for year-end consumer inflation fell to 11.5 percent.