Turkey: Inflation falls, despite central bank rate cuts
Even in Turkey, inflation is beginning to let go of its grip, or at least not to grow any more.
Turkey's annual inflation rate slowed for the first time in 18 months to 84.4% in November 2022, from 85.5% the previous month and in line with market expectations for '84, 7%. Prices have increased much less for transport (107% compared to 117.2% in October) and there has also been a slowdown in housing and utility costs (82.9% compared to 85.2%), furniture , household equipment, routine maintenance (92.8% compared to 93.6%), clothing and footwear (37% compared to 41.3%) and hotels, cafes and restaurants (80.3% compared to 81, 9%). On the other hand, prices increased fastest for food and soft drinks (102.6% versus 99.1%). Month-on-month, consumer prices rose 2.9%, down from 3.5% a month earlier. Here is the inflation graph
Let's see how inflation at these levels has not been an absolute novelty for the Turkish economy, even if with 80% one can objectively have some fears…
The curious, very curious thing about Turkey is that inflation is falling despite the Central Bank's monetary policy being expansionary, completely and totally expansionary, but it seems that since the inflation is of external origin, exactly as in the Euro Area, the rates interest rates are not exactly the most relevant factor for this level of inflation … However here is a graph comparing the level of interest rates and inflation
Turkey saw GDP decline in the third quarter, albeit by only 0.1%, following a string of quarters of growth. More than inflation, this is due to the general economic slowdown, especially in Europe and Russia, linked both to the energy crisis and to the conflict in Ukraine. It is precisely the economic cooling, combined with a less bizarre trend in energy prices, that is behind this drop in inflation.
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The article Turkey: inflation falls, despite the fall in central bank rates comes from Scenari Economics .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/171148-2/ on Mon, 05 Dec 2022 10:45:15 +0000.