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Turkish Inflation Rate Drops Unexpectedly to 16.59 in May

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Turkeys inflation rate fell from a twoyear high to 16.59 yearonyear in May, data showed on Thursday, bucking market expectations for another rise thanks largely to limited price increases during a full lockdown in the first half of the month.

Inflation had quickened to 17.14 in April, the highest since mid2019, due to the liras sharp fall after President Tayyip Erdogan sacked a hawkish central bank governor in March.

The currency weakened further in May, raising expectations of higher inflation due to imports priced in hard currencies. The median estimate in a Reuters poll for annual inflation was 17.25.

Monthonmonth, consumer prices rose 0.89, the Turkish Statistical Institute said, compared to a Reuters poll forecast of 1.46. Graphic Turkish inflation drops from twoyear peak,

Turkey was under lockdown in the first half of May aimed at slowing the spread of new COVID19 cases. Economists said a ban on the sale of some items during the lockdown curbed price rises but that hikes would be implemented in June.

The limited price rises in groups other than food due to reduced demand because of the lockdown had a large impact on the drop in annual inflation, said Haluk Burumcekci, of Burumcekci Consulting.

The rise in clothing prices was far below last years level, he said.

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The monthonmonth rise was driven by increases in transportation, clothing and footwear, while the annual rise was driven by health, household equipment and transportation.

The producer price…

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