ECONOMY

Turk inflation back in double-digit form, but 2004 target on track

ANKARA (Reuters) – Turkey’s annual inflation edged back into double figures in August but analysts said prices were still on track to meet year-end targets agreed with the International Monetary Fund. They said high oil costs and a weaker lira nudged monthly numbers up to, or slightly beyond, market expectations. But a year-on-year rise of 10.04 percent for consumer prices and 10.52 percent for wholesale prices looked fine against the dual goal of 12 percent for end-2004. «The markets could give a negative reaction, but there’s no trend against the year-end target,» said Ozgur Altug, chief economist at Raymond James Securities in Istanbul. The data came after Turkish markets closed for the day, with investors paying more attention to US employment data and Turkey’s European Union membership hopes than to inflation. The consumer price index (CPI) rose 0.58 percent month-on-month in August, figures from the State Statistics Institute showed. Wholesale prices rose 0.79 percent from a month earlier, ticking up again after July’s 1.52 percent fall. The median forecast in a Reuters poll of 25 analysts saw the CPI rising 0.5 percent in August, reflecting record oil prices that came close to $50 a barrel. The wholesale price index was forecast to rise 0.1 percent. The lira currency weakened sharply in August, starting the month around 1.44 million to the dollar and ending at more than 1.5 million, sapped partly by worries over Turkey’s mounting current account deficit. «In general, there’s no problem with the consumer price index. It’s within expectations,» said Oyak Investment economist Mehmet Besimoglu. «We see no problems with the year-end CPI target.» Nevertheless, analysts said interest rate cuts were unlikely on the strength of the August figures. Annual consumer inflation reached single digits in May for the first time in 32 years.