Turkey’s september inflation above expectations

ANKARA - Reuters

Energy Minister Taner Yıldiz says any rise in crude oil prices affects Turkey’s inflation rates negatively because the country imports 90 percent of its oil. AA photo

A weak Turkish Lira and some rises in prices, mainly of transportation, pushed Turkey’s headline inflation up higher than expected in September, raising questions about whether it would overshoot the Central Bank’s full-year forecast of 6.2 percent.

The consumer price index (CPI) rose 0.77 percent month-on-month in September, higher than a Reuters poll forecast of 0.65 percent for a year-on-year increase of 7.88 percent, the Turkish Statistics Institute (TÜİK) said Oct.3.

Producer prices rose 0.88 percent in the month, for an annual rise of 6.23 percent.

“The breakdown of the inflation data signals the weakening of the lira pressuring inflation and points to upward risks in the central bank’s 6.2 percent year-end inflation forecast,” said Ali Çakıroğlu, a strategist at HSBC.

Central Bank Governor Erdem Başçı said last week that the lira’s fall had worsened the outlook for inflation. He said the bank would implement additional monetary tightening in its complex money market operations if there were risks of price growth getting out of control.

Başçı said the lira, which hit its weakest ever against the dollar on Sept. 5, was unjustifiably weak, and said inflation would be higher than the bank’s previous forecast – an argument for more action. The lira strengthened to 1.99 against the dollar yesterday from 2.0065 late on Oct. 2.

Rising energy costs raise inflation rates: Minister

Turkey imports 90 percent of its oil and supplies 72 percent of its total energy needs from abroad therefore any rise in crude oil prices affects Turkey’s inflation rates negatively, Energy Minister Taner Yıldız said Oct.3.

The minister made his comments after a meeting with a number of Turkish students who will study nuclear engineering in Moscow.

The biggest rise in September prices was seen in cooking coal and refinery products. “Political turmoil in Egypt and Syria have caused around a 10 percent hike in crude oil prices, although these countries have a very small share in oil production. A $300-million burden has emerged on Turkey’s energy expenses due to a jump in oil prices brought about by the latest events in Egypt. I hope we’ll all see some decreases in oil prices again after the surrounding political instability is over,” he noted.