ANKARA. Annual Turkish consumer price inflation fell to 19.67 per cent in February, official data showed on Monday, dropping below 20 per cent for the first time since August as food price inflation eased following a government price-cutting campaign.

Economists said the decline was not sufficient to prompt an immediate interest rate cut by the central bank, which is expected to leave key rates unchanged at its policy-setting meeting on Wednesday.

Inflation is a key concern for policymakers, having peaked at a 15-year high above 25 per cent in October. A near 30-percent slide in the lira against the dollar last year has fuelled the inflation and led to a sharp slowdown in economic growth.

Finance Minister Berat Albayrak hailed the February data as showing the success of state sales of cheap vegetables last month and said there will be a significant fall in inflation from this summer due to structural measures on food prices.

“Despite a negative seasonal impact, food inflation remained below expectations, showing the success of the regulated sales decision in curbing food prices,” Albayrak wrote on Twitter.

Month-on-month, consumer price inflation was 0.16 per cent in February. Economists in a Reuters poll had forecast an annual rate of 19.9 per cent, down from January’s 20.35 per cent.

“We fully believe we will end 2019 with a better performance than targeted and will reach our single-digit inflation targets sooner than expected,” Albayrak added. Under its medium-term programme, the government sees end-2019 CPI of 15.9 per cent.

Rate cuts seen beginning in June

The lira was 0.23 per cent weaker against the dollar at 5.3905 by 0910 GMT. It had stood at around 5.38 per cent before then data and had initially firmed slightly.

“There is no change in our expectation regarding the course of inflation and the interest rate decision,” said Is Invest economist Muammer Komurcuoglu, forecasting inflation of 19-20 per cent in the first half before falling in the third quarter.

“We think the central bank will begin rate cuts with its June meeting,” he added.

Announcing the bank’s quarterly inflation report at the end of January, Central Bank Governor Murat Cetinkaya said the bank will maintain its tight monetary stance until it is convinced that inflation is falling.

Food and non-alcoholic drinks prices rose 0.90 per cent month-on-month in February, down from 6.43 per cent in January.

The biggest February price drop was in clothing, where prices fell 4.81 per cent while health sector prices rose 2.48 per cent.

The government last month opened low-priced vegetable market stalls in Turkey’s biggest cities Istanbul and Ankara to fight what officials called “food terror”, saying they would punish anyone trying to keep prices artificially high.

Speaking ahead of local elections on March 31, President Tayyip Erdogan said on Saturday inflation would fall to 6 or 7 per cent, but did not specify a timeline for the goal.

Data on Monday showed the trade deficit tumbled 62 per cent in February to $2.19 billion, with imports sliding 16.6 per cent, illustrating the slowdown in economic activity.