Annual inflation in Turkey fell unexpectedly in March, mainly due to a sharp decline in food prices, according to official data released on April 4.
The Turkish Statistics Institute (TÜİK) said the annual consumer price index fell to 7.46 percent in March. February’s rate stood at 8.78 percent.
While the biggest decline in monthly prices was seen in food and non-alcoholic beverages, the highest rise in the annual index was seen in tobacco and alcoholic drink prices, according to the TÜİK data. The health sector saw the highest monthly increase for March, with a 1.84 percent rise.
“A dramatic drop in food prices played a huge role in the declining inflation rate in the last two months. We saw a drop of around 1.5 percent in food prices on a monthly basis and 4.5 percent on an annual basis,” said Garanti Investment chief economist Gizem Öztok Altınsaç, as quoted by Reuters.
According to the TÜİK data, the highest price decline in the food groups was seen in fresh fruits and vegetables.
“We believe that the trade sanctions by Russia against fresh fruit and vegetable imports from Turkey have played a role in the declining prices across Turkey,” said İş Investment economist Muammer Kömürcüoğlu, as quoted by Reuters.
After Russia began to impose sanctions against Turkish products following the outbreak of the jet crisis between the two countries, Turkey’s fresh fruit and vegetable producers have focused on seeking alternative markets and diverted most of their products into the domestic market.
Deputy Prime Minister Mehmet Şimşek tweeted that the regression in the annual inflation rate to 7.45 percent was “positive,” but also reminded that core inflation is still at around 9.5 percent.
“We will continue to fight against high inflation,” he added.
The Central Bank said on March 24 that limited improvement in core inflation indicators still required a tight liquidity stance.
The bank in a surprise decision cut its overnight lending rate from 10.75 to 10.50 percent last month for the first time since early 2015, mentioning some ease in the global economic outlook.