Turkish lira
Banknotes of US dollars and Turkish lira are seen in a currency exchange shop. Image Credit: Reuters

Ankara, Istanbul: Turkey’s inflation rate unexpectedly slowed somewhat to 19.50 per cent in April from a year earlier, helped by more moderate rises in transportation and clothing, even while overall prices remained lofty in the midst of a recession.

Month-on-month consumer price inflation was a less-than-expected 1.69 per cent, driven by a 6.77 per cent leap in alcohol and tobacco prices in the wake of nationwide local elections at the end of March.

The Turkish lira, which has tumbled in recent weeks, firmed slightly to 5.9685 after the year-on-year data showed a slight decline from 19.71 per cent in March.

A Reuters poll had predicted annual inflation would rise 20.33 per cent and monthly inflation would climb 2.4 per cent.

A near 30-percent slide in the lira against the dollar last year pushed inflation to a 15-year high of more than 25 per cent in October. After a few months of declines, it has stalled this year at high levels and remains a major concern among investors.

A near 32 per cent jump in food and non-alcoholic drinks prices kept overall annual inflation high last month.

The better than expected readings reflected “very depressed domestic demand conditions, with little pricing pressure from corporates,” said Timothy Ash of Bluebay Asset Management.

“Some will also focus on the continued maintenance of price controls and question how accurate or realistic these inflation numbers are now,” he added.

Turkey’s central bank left its inflation forecasts unchanged at 14.6 per cent for end-2019 in its quarterly inflation report this week. Last week, the bank left its key interest rate unchanged at 24 per cent.

Some brands of cigarette and tobacco products hiked prices around 20 per cent in April while other brands left them unchanged after the elections.

Separately, the producer price index rose 2.98 per cent month-on-month in April for an annual rise of 30.12 per cent, the data from the Turkish Statistical Institute showed.