A sharp seasonal rise in clothing prices drove Turkish consumer prices up 1.44 percent in October, official data showed on Thursday, but a fall in annual core inflation could support the case for the central bank to resume interest rate cuts.
The month-on-month rise in the consumer price index (CPI) was below the 1.62 percent forecast in a Reuters poll. Year-on-year consumer prices climbed 7.16 percent, the Turkish Statistics Institute said, sharply above a government target of 5 percent.
In September, consumer prices rose just 0.18 percent.
Last month, the central bank (CBRT) kept interest rates steady, citing weakness in the lira currency, pausing after seven straight months of cuts and repeated calls by President Tayyip Erdogan for cheaper credit.
The lira, unsettled by political uncertainty and a ratings downgrade, hit fresh record lows against the dollar in October and was hovering near those levels on Thursday, easing to 3.1208 from 3.1140 on Wednesday.
Clothing and shoes prices surged 10.43 percent in October, while food and non-alcoholic drinks prices climbed 1.76 percent, the data showed. Clothing prices conventionally rise in October ahead of winter.
Core inflation fell, however, with the annual H index falling to 7.01 percent from 7.56 percent a month earlier.
"Better than expected inflation (especially the improvement in core) shows inflation dynamics strengthen the central bank's hand for a possible rate cut," said Is Invest economist Muammer Komurcuoglu.
Last week, the central bank kept its end-2016 inflation forecast at 7.5 percent in its quarterly inflation report, but raised its 2017 forecast to 6.5 percent from a previous 6.0 percent.
Producer prices climbed 0.84 percent on the month for a year-on-year rise of 2.84 percent, the statistics office said.
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