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Turkey sees highest inflation in more than a year at 14 percent

Photo by Roxanne Desgagnés on Unsplash

Turkey’s annual inflation jumped more than expected to 14.03 percent in November, its highest since August 2019 on the back of the Turkish lira’s depreciation, keeping up pressure for tight monetary policy after a sharp rate hike last month, Reuters reported.

Month-on-month, consumer prices rose 2.30 percent in November, data from the Turkish Statistical Institute (TürkStat) showed on Thursday, compared to a Reuters poll forecast of 1.0 percent. In October, annual inflation stood at 11.89 percent.

Year-on-year, the poll forecast inflation of 12.6 percent.

The jump was driven by food and non-alcoholic drinks which surged 21.08 percent, putting a strain on household budgets as fallout from a new coronavirus wave leaves more out of work. Miscellaneous goods and services prices jumped 29.42 percent.

Inflation had hovered near 12 percent since the beginning of the year despite a sharp economic downturn in the second quarter due to strict measures to combat the initial coronavirus spread.

The central bank has signaled that it will more aggressively target inflation under new governor Naci Ağbal, who raised the policy rate by 475 basis points to 15 percent at his first rate-setting meeting last month.

In a Reuters poll of 13 economists, the median estimate for annual inflation in November was 12.60 percent, with forecasts ranging between 12.30 percent and 13.08 percent.

The lira TRYTOM=D3 weakened to 7.91 after the data from Wednesday’s close of 7.855. It has hit a series of record lows and touched 8.58 in early November before rallying on Ankara’s promises of a new economic model.

The depreciation of the currency, now down around 25 percent since the beginning of the year, raises prices through imports in hard currencies and has kept inflation near 12 percent all year.

The producer price index rose 4.08 percent month-on-month in November for an annual rise of 23.11 percent, the data showed.

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