Turkey inflation falls to 33.52% in July, below forecast

ISTANBUL (Reuters) -Turkish annual consumer price inflation dipped more than expected to 33.52% in July, official data showed on Monday, sustaining a downward trend despite strong rises in housing and education sector prices.

Month-on-month, inflation was 2.06%, the Turkish Statistical Institute said, below forecasts. In June, CPI inflation was 1.37% monthly and 35.05% annually.

In a Reuters poll, the monthly inflation rate was expected to be 2.4% in July, with the annual rate seen at 34.05%.

On July 24, the central bank cut its policy rate by 300 basis points and relaunched an easing cycle, while saying that leading indicators suggest a temporary rise in monthly inflation in July due to month-specific factors.

A mid-year hike in fuel and tobacco prices as well as a rise in natural gas prices had been expected to drive monthly inflation. Transport prices rose 2.89% month-on-month and alcoholic drinks and tobacco prices rose 5.69%. Housing prices were up 5.78%.

The domestic producer price index rose 1.73% month-on-month in July for an annual rise of 24.19%, the data showed.

Inflation is seen dropping to 29.75% at the end of this year according to the poll median, higher than the central bank forecast of 24%.

Finance Minister Mehmet Simsek said that the disinflation is in line with targets and that year-end inflation will be within the central bank's forecast range.

"We will continue to resolutely implement our program to achieve lasting price stability, our primary priority," Simsek also said in a post on X.

(Reporting by Miraç Eren Dereli and Ezgi Erkoyun; Editing by Daren Butler)

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