Turkey’s annual inflation hits nine-year peak in October

ANKARA

Turkey’s annual inflation spiked to a nine-year high of 11.9 percent in October, official data showed on Nov. 3. The inflation rate was driven by a sharp increase in transportation, clothing and food prices, and the rise potentially puts more pressure on the Central Bank to tighten policy.

Inflation remains one of the most pressing problems for Turkey’s economy, which has recovered from the downturn that followed last year’s failed coup.

Weakness in the lira has helped stoke price increases in everything from food to fuel.

On a monthly basis, consumer prices rose 2.08 percent in October, the Turkish Statistical Institute (TÜİK) stated, exceeding forecasts.

Central Bank Governor Murat Çetinkaya recently said significant inflation rises could be seen in October and November due to a number of risks.

“There may be an upward-rise in inflation rate in October … We can also expect some similar risks for November as well … Due to the base effect, there will be decrease in inflation rate in December and we expect this decline will continue in the upcoming months,” Çetinkaya said at a press meeting to announce the quarterly inflation report on Nov. 1.

The Central Bank lifted its inflation forecasts for 2017 and 2018, vowing that a tight monetary policy would be maintained until the inflation outlook improves in line with targets.

The Bank raised its inflation forecast to 9.8 percent from 8.7 percent for 2017 and to 7 percent from 6.4 percent for 2018, citing the recent depreciation of the lira and rising oil prices.

The inflation rate will regress to 6 percent by the end of 2018 and stabilize at around 5 percent in the medium term, according to Central Bank forecasts.

According to TÜİK data, the highest annual increase was 16.79 percent in transportation in October, followed by food and non-alcoholic beverages with 12.74 percent and miscellaneous goods and services with 12.63 percent.

The highest monthly increase was 11.51 percent in clothing and footwear, followed by furnishing and household equipment with 2.96 percent and transportation with 2.61 percent.