ANKARA – April 4 (ONLINE) Turkey’s annual consumer inflation leapt to a 20-year high of 61.14% in March, data showed on Monday, fuelled by rising energy and commodity prices following the Russia-Ukraine conflict which is compounding the impact of a lira crash late last year.
Inflation has been surging since last autumn, when the lira slumped after the central bank (CBRT) launched a 500 basis-point easing cycle long sought by President Tayyip Erdogan.
On a month-on-month basis consumer prices rose 5.46%, the Turkish Statistical Institute said, compared with a Reuters poll forecast of 5.7%. Annually, consumer price inflation was forecast to be 61.5%.
“CBRT policies are just not working in countering inflation,” said Tim Ash at BlueBay Asset Management. “Indeed, I think the overwhelming consensus is that the unorthodox policy settings of the CBRT are a major cause of inflation.
“The war in Ukraine is just making things that much worse,” Ash added, nothing the bank had not hit its annual inflation target of 5% since 2011.
The inflation data had little impact on the lira, which was 0.1% weaker against the dollar at 14.71. It tumbled 44% in 2021 and is another 10% weaker so far this year.
Figures also showed the producer price index climbed 9.19% month-on-month in March for an annual rise of 114.97%.
The monthly rise in consumer price inflation was driven by transportation, which includes petrol prices, and education-related items such as text books and school fees, which rose 13.29% and 6.55% respectively. Rising energy prices in particular have drawn public protests in recent months.
Annually, the transportation group led the rise, up 99.12%, followed by food and non-alcoholic drink prices, at 70.33%, and furniture prices at 69.26%.
Economists marked up inflation expectations at a global level following the Russian invasion of Ukraine, with energy prices hitting multi-year highs as the West sanctioned Moscow. Turkey imports almost all of its energy needs.
Economists see Turkish price rises remaining high for the rest of the year, with the median estimate for year-end inflation at 52.2%, up from 38% in a Reuters poll conducted a month ago.
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