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Turkish inflation at its 'worst' before expected slowdown

Turkey’s inflation shot up to a two-year high in May, but a slowdown is expected to begin in June.
A vendor sells potatoes and other vegetables to a customer in an open market in central Ankara February 5, 2014. The humble potato has become a factor in Turkey's political and economic turmoil as prices of the staple soar, hurting the living standards of poorer Turks just before the ruling AK Party's toughest election test in a decade. At a market in the lower-income Istanbul suburb of Kucukcekmece, potatoes sell for between 3 and 4 lira ($1.33 and $1.77) a kilogramme, up from slightly more than 1 lira at
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Turkey’s consumer inflation rose 0.4% from April to May, bringing the year-on-year increase to 9.66%, the highest level in 25 months. The data, announced earlier this week, was hardly a surprise since the Central Bank had already warned that May inflation would be the “worst.” The markets had even braced for 9.78%, but a 1.35% monthly decrease in food and non-alcoholic beverages amid declining fruit and vegetable prices contained the rise. Prices of green pepper, tomato, sweet pea and eggplant, for instance, fell by 25% to 52%.

The monthly inflation in producer prices was down 0.52% in May. Core inflation — known also as “real inflation” for being stripped from seasonal and external effects — increased 1.5% in the same period, bringing the year-on-year rate to 9.77%, the highest in the last seven years.

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