ISTANBUL (Reuters) -Turkey’s monthly inflation rate is expected to be 2.6% in September, driven by hikes in education and food prices, while the annual rate is seen dipping to 32.5%, a Reuters poll showed on Friday.
The median estimate of 13 economists showed monthly inflation rising to 2.6% from 2.04% in August. Forecasts ranged from 2.3% to 3.5%. Year-on-year inflation forecasts ranged between 32.09% and 33.6%, down from 32.95% in August.
Economists said price hikes for education and related services as the school year started, as well as price hikes of eggs, meat and other food basket items, will impact September inflation.
Morgan Stanley said the inflation data will be closely watched, with the central bank recently highlighting food and services-related inflationary pressures.
“Barring any significant upside surprises in September inflation or its components, we expect the CBRT to continue its rate cuts, but reduce the size of the cut to 200bp, from 250bp in September. This, in turn, would bring the one-week repo rate to 38.50%,” Morgan Stanley said.
Earlier this month, Turkey’s central bank slowed its easing cycle with a 250-basis-point rate cut bringing the policy rate to 40.5%, amid heightened political risk and higher-than-expected inflation and growth figures.
In March, Turkish assets came under pressure, with the lira hitting a record low against the U.S. dollar after Istanbul Mayor Ekrem Imamoglu — President Tayyip Erdogan’s main political rival — was jailed pending trial on graft charges that he denies.
Inflation is seen dropping to 30% by year end, according to the poll median, higher than the central bank target of 24% and its forecast range of 25-29%. The median did not change when compared to the poll conducted a month ago.
Central bank said it will review its policy step size on a meeting-by-meeting basis, and tighten its stance if there is a significant deviation in the inflation outlook from the interim targets.
The Turkish Statistical Institute will release September inflation data at 0700 GMT on October 3.
(Reporting by Ezgi Erkoyun; Editing by Daren Butler)
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