Turkey's April inflation figures above expectations

Turkey's both consumer price index and producer price index were higher than market expectation in April due to the price increases in clothing and petroleum products. Data released by the Turkish Statistics Institute (TUIK) show that the country's consumer price index (CPI) increased 1.34 percent month on month in April while producer price index (PPI) rose 1.94 percent month on month. Year-on-year CPI rose to 8.83 percent while year-on-year PPI increased to 4.96 percent. Year-on-year inflation continued its upward trend in April contrary to the expectation of Turkey's Central Bank (TCMB). TCMB reduced interest rates 0.25 percent points in April, expecting that year-on-year inflation would show a downward trend as of the second half of this year. TCMB President Durmus Yilmaz recently said “The rapid increase in oil price and the uncertainty in price movements are the basic risks of the inflation”. He also added that “Inflation is expected to be 4.8-6.2 percent in 2006. If the interest rates remain stable, the inflation may decrease to 1.9-4.5 percent as of the third quarter of 2007”.