Turkish September inflation at 1.84%, below forecast

In September, Turkey's consumer price inflation reached 1.84% month-on-month, falling short of market expectations. The annual inflation rate was reported at 29.73%, according to data released by the Turkish Statistical Institute on Monday. Anticipated monthly inflation was 2.3% in a Reuters poll, with annual consumer price inflation forecast at 30.3%.

The September inflation was primarily driven by a 14.2% surge in education costs due to the commencement of the academic year, coupled with hikes in clothing, transportation, and housing prices. Conversely, food prices saw a slight decline.

In the preceding month of August, monthly consumer price inflation stood at 1.84%, while the annual rate was recorded at 31.51%. Turkey's central bank has maintained its interim inflation target for the year-end at 24% and has elevated its year-end inflation forecast to 28% in its latest inflation report, published in August.

Despite the recent inflation data, Turkey's central bank chose to keep its key interest rate at 37% during the latest meeting, as previously announced. This decision marked the fifth consecutive meeting where the central bank maintained the rate, signaling that a monetary easing cycle may start later this year. Earlier, JP Morgan had projected that the September data would indicate a decelerating underlying trend of inflation, potentially paving the way for a rate cut during the October Monetary Policy Committee (MPC) meeting.

The domestic producer index, meanwhile, expanded by 2.07% month-on-month in September, with an annual rise of 27.38%.