Turkey’s inflation rate rises more than expected after hikes in tobacco, alcohol prices

ANKARA

Turkey’s inflation rate rose more than expected in December mainly due to hikes in prices of tobacco products and alcoholic beverages, a data from the Turkish Statistics Institute (TÜİK) showed on Jan. 3. 

The annual inflation rate rose to 8.53 percent in December from 7 percent in November. 

On a monthly basis, consumer prices rose by 1.64 percent in December, following a 0.52 percent gain in the prior month. An increase by 0.9 percent was initially expected. 

The government also raised its forecasts for consumer price inflation in October. It predicted an inflation rate of 7.5 percent at the end of 2016 and 6.5 percent in 2017, raising the forecast for the next year from a previous 6 percent.

Economy Minister Nihat Zeybekci said the government would not miss its forecast in 2017. 

“I believe that the weight of food prices in the inflation basket should be reassessed. The share of food is 24 percent,” he said. 

The highest monthly and annual increases were seen in alcoholic beverage and tobacco product prices. While the prices of these products saw a monthly increase of 7.3 percent, the highest annual increase in these products was recorded at 31.6 percent.

In December 2016, the indices for food and non-alcoholic beverages rose by 3.29 percent, 1.97 percent for transportation, 1.42 percent for recreation and culture, and 1.28 percent for furnishing and household equipment. Transportation with 12.36 percent of annual increase, miscellaneous goods and services with 11.08 percent, health services with 9.73 percent, and education with 9.47 percent were the other main groups that experienced high annual increases.

The Turkish Central Bank had missed both its 5 percent inflation target and its 7.5 percent year-end forecast.