Turkey’s inflation eased for the second month running in December to 20.3 percent year-on-year, data showed on Thursday, as tax cuts and discounted products helped to trim prices a little more than economists had expected.
The December reading was slightly below the 20.52 percent forecast in a Reuters poll of 12 economists. Inflation peaked at a 15-year high above 25 percent in October before beginning to decline in November. Nonetheless, it remains one of the most pressing problems for the economy.
On a month-on-month basis, consumer prices fell 0.40 percent in December, compared with a poll forecast of a 0.23 percent fall, the data from the Turkish Statistical Institute showed. The biggest monthly decreases were in clothing and transport, it said, while food costs represented the biggest increase on a monthly basis.
Inflation has been stoked by a sell-off in the lira. Turkey’s lira <TRYTOM=D3> fell 28 percent in 2018, hit by investor concerns about the central bank’s independence and a deterioration in U.S.-Turkish ties.
It has stabilised since the height of the crisis in August, helped by a hefty 6.25 percentage point rate hike in September and an improvement in relations with the United States.
As of 0730 GMT the currency was 0.8 percent weaker against the dollar at 5.44.
The government introduced tax cuts for some consumer products including vehicles, furniture and white goods and encouraged shops to offer at least 10 percent discounts until the end of 2018 on goods affecting inflation.
President Tayyip Erdogan’s government, which is facing local elections in March, recently announced a plan to increase the minimum wage by more than a quarter in the new year, seen adding to add 1.5-2 percentage points to inflation.
The producer price index fell 2.22 percent month-on-month in December for an annual rise of 33.64 percent, Thursday’s data also showed.