Turkey’s welcome inflation

ISTANBUL (Reuters) – Turkey reported month-on-month inflation for November of 4.2 percent in both wholesale and consumer prices yesterday, but analysts cautioned against excessive optimism at the lower than expected figures. Annual consumer (CPI) inflation in November was 67.3 percent with 84.5 percent for wholesale prices (WPI), the state statistics institute said in a statement. Month-on-month wholesale inflation in October was 6.7 percent with consumer inflation at 6.1 percent. «Coming in under expectations is a good result. It’s low but that doesn’t yet show that it will last,» said Saruhan Dogan, an economist at Alternatifbank in Istanbul. Private sector manufacturing industry prices, closely watched as «core inflation,» rose 4.0 percent. They had risen 7.6 percent in October. «Four percent core inflation is particularly positive,» said Funda Gungor of HSBC in Istanbul. Most observers said the data would be good for Turkish markets over the short term. «For the short term it will be good for money markets. The fact that WPI came in low is positive,» said Selim Somcag, an economist at Turk Ekonomi Bankasi in Istanbul. The economic crisis that erupted in February forced the government to abandon its pegged-currency regime and float the lira, unleashing sky-high inflation. The lira has since lost about half of its value against the dollar, forcing up the prices of a range of imported goods. Turkey is also in a deep recession; officials expect to cut GNP by 8.5 percent this year, slowing domestic demand. The Cypriot carrier, which is majority-owned by the government, came second in an assessment by privatization adviser Credit Suisse First Boston (CSFB). Cyprus Airways pulled out of the bidding race in late August, with managers privately expressing frustration at delays in the Olympic selloff.

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