Turkey’s inflation hits double digits in February for first time since 2012

ANKARA – Anadolu Agency

Turkey’s annual consumer price inflation hit 10.13 percent in February, hitting double digits for the first time since April 2012 and coming in higher than analysts’ expectations, as transportation and health costs climbed, according to official data. 

Consumer prices were up 0.81 percent, when compared with January, exceeding forecasts, data from the Turkish Statistics Institute (TÜİK) showed on March 3.
 
The report showed that the highest monthly increase was in transportation, at 2.82 percent, while the main drivers of yearly consumer price inflation on an annual basis were alcoholic beverages and tobacco, together up 21.72 percent.

The Turkish Lira, which lost more than 1 percent of its value against the U.S. dollar on March 2, weakened to as far as 3.7460 after inflation data was released, its weakest since Feb. 8. It subsequently firmed back to 3.7285.

Odeabank Economic Research and Strategic Planning Director Ali Kırali said the upward pressure over the inflation rate would likely continue in the upcoming period, amid the ongoing fluctuations in food prices, the loss in the lira’s value and the deterioration in pricing behaviors, as reported by Reuters. 

He also noted that the rise in food prices could be limited in the upcoming months as the Food Committee takes key measures on product basis.
 
“In light of the Central Bank’s monetary tightening stance, we do not change our annual forecast at 8 percent for 2017, despite a rise in the upward pressure,” Kırali added.  

In January, the Central Bank raised its year-end inflation forecast to 8 percent from 6.5 percent. It has taken unorthodox monetary tightening steps to tame price rises and defend the lira after sharp losses at the start of the year.

Finance Minister Naci Ağbal said the prices would go down in the upcoming period with some measures being taken by the Central Bank and the government.
 
“The inflation rates will be high in the first months of 2017. The base effect matters here. We have also seen the pricing effects. We should also mention the cost pressures due to the loss in the lira’s value, pushing up the import prices,” he said, as quoted by state-run Anadolu Agency. 

“The prices will go down in the upcoming months as a result of the Central Bank’s moves and our government’s measures, especially to be taken by the Food Committee,” he added. 

According to analysts, the increases in automotive prices and the delayed impact of the loss in the lira’s value pushed up the transport costs. 

TÜİK in January said it had rejigged its inflation basket, cutting the weighting of food and non-alcoholic beverages.