ANKARA – Turkish inflation fell in August, against market expectations of a rise, due to falling food and clothing prices. The consumer price index fell 0.44 percent in August, instead of an expected 0.40 percent rise, trimming the annual rate to 10.26 percent, the Turkish Statistics Institute said yesterday. The producer price index (PPI) fell 0.75 percent, instead of the expected 0.30 percent increase, and rose 12.32 percent year-on-year. The figures drove the lira to around 1.4440 to the dollar in after-hours trade, up about 0.8 percent from yesterday’s closing level. «It’s a very surprising figure. It is something quite unusual to have a fall in August. Usually we have a relatively strong rise in that month,» said Murat Toprak, senior currency strategist at Societe Generale. The price of food and non-alcoholic beverages, which have a large weighting in the consumer price index, fell 1.21 percent from July, while clothing and footwear prices fell 6.92 percent. Earlier this year there was a sharp sell-off in Turkish assets when inflation crept back into double digits. The central bank raised borrowing rates 425 basis points to rein in price rises amid a slide in the lira. Despite the August data analysts believe that the central bank, which left key interest rates unchanged this month, may still raise them. «Obviously it will reduce pressure on the Turkish central bank but I don’t think the tightening cycle is over yet,» said Toprak. The bank had said the impact of currency weakness on inflation would ease from August, and the market had been expecting a much softer figure than was seen in July. But the annual figure, which compares to an annual 11.69 percent in July, is still way above a central bank target of 5 percent for this year and 4 percent for next year. «Nevertheless this situation should not make the central bank too relaxed because there are still inflation figures for September and October which will be watched closely,» said Raymond James chief economist Ozgur Altug. The core CPI rate remains unchanged, indicating underlying inflationary pressure, said another analyst. Turkey has a $10 billion standby agreement with the International Monetary Fund. Its previous $19 billion agreement helped it recover from a 2001 financial crisis.