Turkish inflation just below consensus

Turkish inflation rose by less than expected in September despite high global oil prices, data showed on Monday, but economists said prospects for an interest rate cut hinged more on developments in the European Union.
September inflation data were released as EU foreign ministers haggled over the wording of guidelines for Turkey's long-anticipated entry talks.
Later a source at the prime minister's office said Turkey had accepted a draft agreement. But a spokesman for current EU presidency holder Britain said it was too early to say there was an agreement and dialogue was continuing.
Turkey's consumer price index (CPI) rose 1.02 percent month-on-month in September for an annual rise of 7.99 percent, the State Statistics Institute (DIE) said.
The producer price index (PPI) in September also increased by less than predicted, edging up 0.78 percent from August, or 4.38 percent higher annually.
In a Reuters poll of 23 banks and brokerages, economists had forecast the CPI would rise 1.10 percent month-on-month in September while the PPI was seen rising 0.90 percent.
"Turkey September inflation (was) a fraction lower than expected... (It was) a reasonable result given oil-driven inflation pressures at the moment," said Caroline Gorman of analysts 4CAST.
"We do not expect the market to pay much attention to the figures as the focus is firmly on EU-related news at the moment," she added.
Gorman said the EU-linked developments would be key in determining whether the central bank decided at a meeting next week whether to cut interest rates.
Simon Quijano-Evans of Bank Austria Creditanstalt agreed.
"Assuming EU accession negotiations start today and given that (the inflation data) came out slightly below consensus expectations, I would see the central bank moving with a rate cut next week of at least 50 basis points," he said.
The central bank left its interest rates unchanged for a third consecutive month in September, with the overnight borrowing rate at 14.25 percent and the lending rate at 18.25 percent.
However, it said further rate cuts were possible. The bank cut interest rates in each of the first six months of this year.
Inflation rose faster than predicted in August with CPI at 0.85 percent and PPI at 1.04 percent.
Monday's data showed farm prices rose 1.53 percent in September and manufacturing industry prices by 1.54 percent.
Turkey targets year-end inflation of eight percent in 2005 and five percent in 2006.