November 2, 2018 / 3:18 PM / 10 months ago

Turkish October CPI expected to remain at 24.5 percent, poll shows

ANKARA (Reuters) - Turkish inflation is expected to remain at a 15-year peak of 24.5 percent in October, a Reuters poll indicated on Friday, as the effect of a sharp fall in the lira over the summer continues to hit consumer prices.

FILE PHOTO - A vendor displays fruits in his shop in a local market in central Istanbul, Turkey October 9, 2018. REUTERS/Murad Sezer

Month-on-month, the consumer price index is are expected to rise 2.0 percent, according to the poll, conducted among 18 institutions. It also put annual consumer price inflation at 23.5 percent at the end of this year.

The central bank this week sharply raised its inflation forecasts for this year and next, predicting a rate of 23.5 percent by the end of 2018 rather than 13.4 percent, acknowledging the impact of a lira selloff that has shaken confidence in the economy.

Turkey's lira TRYTOM=D3 slumped in August and at one stage was down 47 percent since the start of the year on investor concerns over the central bank's independence and a deterioration in U.S.-Turkish ties.

It has since recovered some ground after a mammoth 6.25 percentage point rate hike in September and an improvement in relations with the United States.

Economists say government steps to cut consumer taxes on furniture, white goods and motor vehicles will trim year-end inflation by around 1 percentage point.

The government is also encouraging shops to offer discounts of at least 10 percent until the end of the year on products affecting inflation.

“Tax cuts will have a downward effect of 1-1.5 percent (points) on year-end inflation. Discounts as part of government’s fight against inflation also limit inflation,” said Serkan Gonencler, an economist at Istanbul-based Seker Invest, who expects October inflation to come in at 25.0 percent.

Turkey’s CPI is due to be published on Nov. 5 at 0700 GMT.

The poll’s 18 forecasts for annual inflation ranged widely from 20 to over 31 percent, while month-on-month forecasts for October ranged between 0.15 percent and 4 percent.

The central bank, which more than doubled its forecast for food inflation at the end of 2018, said it would maintain a cautious stance against double-digit inflation, which is far above its 5 percent target.

Writing by Ezgi Erkoyun; Editing by Kevin Liffey

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