Turkey Sees First Negative Inflation Figure in 16 Years

The last time the WPI dropped to negative figures was the minus 4.4 percent witnessed in June 1987; prior to that, June 1985 saw a rate of 1.3 percent and July 1984 0.7 percent.

According to a statement issued by the State Institute of Statistics (DIE), annual wholesale inflation was determined to be 33.7 percent, while annual consumer inflation was 30.7 percent. The rate of the inflation for the first five months of the year stood at 13.7 percent for the WPI and 12.2 percent for the CPI. A drop in exchange rates and the cost of oil were cited as the defining factors on the inflation numbers.

Economists pointed out that a positive airing of inflation would cause the Central Bank to implement the decrease in short-term interest rates that has been expected for some time. The increase in annual inflation experienced since the beginning of the year will drop by May, they indicated. Economy Minister Ali Babacan, in a statement made last month, had predicted that along with lower monthly rates during the summer, inflation would emerge as a minus figure. Babacan’s prediction has turned out to be accurate, and Turkey has witnessed real success for the first time in the struggle against inflation.

The cost of oil, natural gas, televisions and "white goods" such as refrigerators, washing machines and dishwashers, when indexed to the dollar, nominally lost value last month. While the price fall in crude oil was up to 15.5 percent, in diesel oil it was 4.3 percent and in super fuel oil it was 3 percent. The cost of sheet metal decreased 2.3 percent, and the price of aluminum ingots decreased 5.6 percent.