Turkish inflation slows to 11.8 percent in July, beating forecasts

Turkey’s consumer price inflation rate fell to 11.8 percent in July, dropping faster than economists expected.

Annual inflation slowed from 12.6 percent in June, the Turkish Statistical Institute said on its website on Tuesday.

The Turkish central bank is seeking to slow inflation towards its year-end forecast of 8.9 percent while keeping interest rates low to support economic growth. The bank’s benchmark lending rate stands of 8.25 percent.

Polls of economists by Reuters and Bloomberg had forecast July inflation at 12.1 percent and 12 percent, respectively.

The slowdown in consumer price inflation was spurred on by smaller price increases for clothing, footwear, household equipment, transport and communications, according to the data.

Turkey’s inflation rate may end the year little changed at 11.7 percent, provided the lira remains flat against major currencies, Goldman Sachs said in a report before the figures were released, according to Bloomberg. Goldman stood by a prediction that the central bank would start to tighten monetary policy by the end of the year.

The Turkish lira fell 2 percent to 7 per dollar last week, nearing a record low of 7.269 per dollar reached in May. A weaker lira makes imports more expensive. Turkey imports nearly all the energy it consumes.

Producer price inflation accelerated to an annual 8.3 percent in July from 6.2 percent in June, the institute said.

The lira traded up 0.2 percent at 6.94 per dollar after the data was released.