The Turkish Statistics Institute (TurkStat) has announced the inflation figures for May, which declined to 8.2 percent from 11.1 percent in April, hitting the single digit level for the first time in the last five months.
The rate has surprised observers, most of whom had predicted an increase. According to the written announcement the consumer price index (CPI) dropped by 0.2 percent in May compared to the previous month. There was also an increase of 0.53 percent in the producer price index (PPI), bringing the rate to 8.2 percent in May from 7.7 percent in April.
The results revealed that food prices in particular experienced a significant decline and that the price of raw food products went down by 4.2 percent, which was the steepest drop since 2003. The price of processed food was down by 0.5 percent, leaving it well below the seasonal average.
Downward trends in international oil and gold prices as well as durable consumer goods have contributed to the sudden decline in the inflation rate. Also, the decrease in the price of clothing, which has hovered above the average for last three months, was another contributor to the overall trend. However, looking at the monthly rates, the highest rise was seen in clothing and footwear products, at 8.6 percent.
Out of 444 products included in the index, the prices of 106 products fell, while the price of 255 increased. The price of the remaining 83 products remained stable. The highest increase was in the price of alcohol and tobacco products, which was 18.7 percent above the price in the same month last year.
Central Bank of Turkey Governor Erdem Başçı had predicted in April that people would see decreasing inflation in the country in the second half of 2012 and that the pace of decline would peak in the last three months of the year. The chief banker had noted that inflation in Turkey is dependent on multiple variables, but among them energy prices are game-changers these days. He added, “We predict that inflation will gradually drop from the third quarter, and this decline will be apparent in the final quarter.”
The major factor behind Turkey's double-digit consumer inflation is the gross domestic product's (GDP) rapid expansion for almost a decade. According to TurkStat data, the national economy expanded by 8.5 percent last year at fixed prices, on top of the 8.9 percent increase recorded a year earlier, making Turkey the fastest-growing economy in all of Europe and within the larger Organization for Economic Cooperation and Development (OECD).