Turkish annual inflation rose more than expected to 15.61 percent in February, the highest since mid-2019 according to official data on Wednesday, keeping pressure on the central bank to maintain some of the tightest monetary policy globally, according to Reuters.
Month-on-month, consumer prices rose 0.91 percent in February, according to the Turkish Statistical Institute, compared to a Reuters poll forecast of 0.7 percent. On a year-on-year basis, the poll’s median was 15.39 percent.
Turkish inflation has been stuck in double digits for most of the last four years and has edged higher the last four months despite sharp interest rate hikes late last year. It stood at 14.97 percent in January, well above the five percent target.
The monthly rise was driven by the health and food groups, which rose 3 percent and 2.57 percent, respectively. Annual transportation prices jumped more than 22 percent, reflecting costly energy imports and volatility in the lira currency.
The producer price index rose 1.22 percent month-on-month in February for an annual rise of 27.09 percent, the data showed.
Since Naci Ağbal was appointed governor in November, the central bank has hiked its key rate to 17 percent from 10.25 percent, giving Turkey the tightest policy of any major developed or emerging market economy.
Rate cuts are expected later in the year, yet some analysts expect a hike later this month to address inflation and a sharp drop last week in the lira, which raises import prices.
Özlem Derici Şengül, founding partner of Spinn Consulting in İstanbul, said inflation will likely drift above 16 percent or even higher by April. “This might prompt the central bank to take an action to curb inflation expectations,” she said.
Ağbal has promised to raise rates more if needed to ensure inflation drops to 9.4 percent as the bank forecasts by year end, higher than market expectations.
Economists expect inflation to begin falling gradually after April, with a Reuters poll year-end estimate of 10.90 percent.