Deteriorating pricing behavior in Turkey may push up inflation: Central Bank chief

ISTANBUL

Turkey’s risk of higher inflation has risen due to deteriorating “pricing behavior,” even though domestic demand has weakened, Central Bank Governor Murat Çetinkaya said in the text of a presentation on Oct. 12.

While external demand remains strong, the slowdown in domestic demand is sharpening, read the text of Çetinkaya’s presentation at the IMF and World Bank Group meetings in Bali.

“Deterioration in the pricing behavior poses upside risks on the inflation outlook, despite weaker domestic demand conditions,” read the text.

Exchange rate depreciation has increased inflationary pressures, Çetinkaya noted, while adding that demand conditions were expected to limit upside risks on inflation.

“A strong monetary tightening has been delivered to support price stability. The Central Bank will continue to use all available instruments in pursuit of the price stability objective,” he said.

In his presentation, Çetinkaya also said rebalancing economic activity has become significant.

Amid a significant decline in the Turkish Lira, Turkey’s annual inflation reached 24.52 percent in September, up from 17.9 in August.

Over the past five years, annual inflation saw its lowest level at 6.13 percent in April 2013, while the figure reached its highest level this September.

Unveiling a new set of measures to fight inflation, Turkish Treasury and Finance Minister Berat Albayrak vowed an “all-out war” on inflation with the support of the private sector on Oct. 9.