---
title: "Central Bank: Food Inflatıon May Declıne In December"
date: "2014-12-31 16:17:01"
author: "DHA"
tags: "İstanbul"
canonical_url: "https://www.mynet.com/central-bank-food-inflation-may-decline-in-december-180101627637"
original_url: "https://www.mynet.com/central-bank-food-inflation-may-decline-in-december-180101627637"
---
# Central Bank: Food Inflatıon May Declıne In December
\- Indicators for December signaled a possible decline in the annual food inflation due to the unprocessed food group, according to the summary of the Monetary Policy Commıttee meeting, released by the Central Bank of Turkey, on Wednesday.
Annual food inflation had risen by 1.81 points to 14.37 percent, which had been led particularly by fresh fruits and vegetables, the annual inflation of which soared due to the base effect, said in the summary.
"The seasonally-adjusted data pointed to a partial correction in unprocessed food prices in the last three months. However, the unfavorable outlook that spilled over into processed food prices continued in November and inflation climbed to 13.61 percent in this group. Indicators for December signal a possible decline in the annual food inflation due to the unprocessed food group."
The committee said, consumer inflation fell around 0.5 points in November, due to the 30-dollar fall of the Brent crude in the July-November period, directly effecting the fuel and gas prices. "Indicators for December suggest that in line with the decline in oil prices, the downward course in these two items continued, being more pronounced in fuel prices. Accordingly, the annual energy inflation is foreseen to decrease notably in December."
The seasonally-adjusted data pointed to a sustained improvement in the underlying trend of core inflation indicators, while the fall in the underlying trend of services inflation triggered by the items closely related to fuel prices contributed to this development, said in the summary.
"External demand indicators point to no improvement in the rebalancing process based on goods excluding gold, which ground to a halt in the third quarter, due to Europe’s slowing economy and geopolitical tensions have caused exports to lose some pace. However, the favorable developments in the terms of trade and the moderate course of consumer loans are expected to contribute to the improvement in the current account balance."
UNEMPLOYMENT  
In seasonally adjusted terms, total and nonfarm unemployment rates had been higher in September than in the previous period, while the rise in unemployment rates had been caused by the increase in the ratio of nonfarm labor force to working-age population.
"All nonfarm subsectors, services in particular, added to employment growth. Total employment expectations, a Business Tendency Survey indicator, have moved further into positive territory during the final quarter. In this regard, nonfarm employment might see a modest increase in the final quarter."
LOAN GROWTH  
Loan growth continued at reasonable levels in response to the tight monetary policy stance and the macroprudential measures, the Central Bank Committee said in the summary, while the composition of loans also continued to move in the desired direction.
"While the annual growth rate of consumer loans hovers around low levels, commercial loans remain relatively more robust. This loan outlook not only limits medium-term inflationary pressures but also contributes to the improvement in the current account balance. Additional tightening measures will be taken, should credit growth accelerate in a way that poses upside risks to inflation and aggravates financial risks by distorting the rebalancing process" said in the summary.
COMMODITY PRICES  
Although high food prices delay the improvement in inflation, core inflation trends have displayed a marked decrease compared to the elevated levels in the first quarter. In addition, the fall in commodity prices, especially in oil prices, has shown a favorable impact on inflation. In the event that these new levels of oil prices prove to be largely permanent, this channel will support the projected disinflation process over the upcoming period.
UPSIDE RISKS  
Under the current monetary policy stance, the Committee anticipated that inflation would decline in line with the forecast presented in the Inflation Report throughout 2015, at a faster pace in the first half of the year, said in the summary and added:
"Along with these positive developments in the inflation outlook, the currently elevated levels of inflation still continue to pose upside risks to medium-term expectations and the pricing behavior. In the forthcoming period, inflation expectations, the pricing behavior and other factors that affect inflation will be closely monitored and the tight monetary policy stance will be maintained, by keeping the yield curve flat, until there is a significant improvement in the inflation outlook."
RATE HIKE BY FED  
Global financial markets had followed a volatile course recently, while capital flows to emerging markets might continue to be volatile in 2015. The ongoing uncertainty about the normalization of global monetary policies caused the global risk appetite and capital flows to be data-sensitive. The Committee emphasized that the Central Bank of Turkey had a rich set of policy tools to use against an earlier-than-expected policy rate hike by the US Federal Reserve Board (Fed).
POLICY RATE REMAINED UNCHANGED  
Central Bank of Turkey's Monetary Policy Committee has decided to keep the policy rate unchanged at 8.25 percent, as expected. The Committee also kept short term rates unchanged, marginal funding rate at 11.25 percent, the interest rate on borrowing facilities provided for primary dealers via repo transactions at 10.75 percent, and borrowing rate at 7.5 percent, said in the statement released by the Central Bank on Wednesday.
Turkish Statistical Institue is expected to release the December and 2014 inflation rates on Monday, January 5th.
