Maslak Financial and Business Center in the Sariyer district of Istanbul.
Ayhan Altun | Moment | beautiful images
Türkiye’s annual consumer price inflation soars to 67.07% in February, Turkish Statistical Institute the second saidachieved above expectations.
Analysts polled by Reuters had predicted annual inflation would rise to 65.7% last month.
According to the statistics institute, the combined sector of hotels, cafes and restaurants saw the largest annual price increase at 94.78%, followed by education at 91.84%, in when the ratio for healthcare is 81.25% and transportation is 77.98%.
Consumer prices for food and non-alcoholic beverages rose 71.12% in February compared to the same month last year and recorded a surprisingly large monthly increase of 8.25%.
The country’s monthly inflation rate of change from January to February was 4.53%.
The strong figures are raising concerns that Turkey’s central bank, which indicated last month that a painful eight-month interest rate hike cycle was over, may have to return to tightening. chop.
Liam said: “Turkey’s stronger-than-expected rise in inflation to 67.1% year-on-year in February adds to our concerns as it comes on the back of a large rise in inflation in January and the strength of household spending growth in the fourth quarter.” Peach, senior emerging markets economist at London-based Capital Economics, wrote in a research note Monday.
“Core price pressures continue to be elevated and if this continues, the likelihood of restarting the central bank tightening cycle will only increase in the coming months,” he said.
Some analysts predict inflation will eventually fall to around 35% by the end of the year. According to Capital Economics, the latest figures “underscore that inflationary pressures in the economy remain very strong and suggest that the deflationary process took a step back at the beginning of this year”.
Turkish Finance Minister Mehmet Simsek was quoted by Reuters as saying that the country’s inflation would remain high in the first half of this year “due to base effects and delayed effects of interest rate hikes”, but This number will decrease over the next 12 years. month.
Persistently high inflation is fueled by Türkiye’s severely weakened currency, lira, is at a record low against the dollar. The lira was trading at 31.43 per greenback around noon local time on Monday. The Turkish currency has lost 40% of its value against the dollar over the past year and 82.6% over the past five years.
“Clearly a disappointing set of inflation is on display this morning,” Timothy Ash, emerging markets strategist at BlueBay Asset Management, wrote in a note. Turkey’s central bank, he said, “has been trying to shrink protected foreign exchange-linked deposit accounts and the need to rebuild foreign exchange reserves.”
He added that this development has “continued to put downward pressure on the lira”, creating inflationary pass-through.
Analysts note that Turkey’s policymakers want to avoid raising interest rates again, especially ahead of local elections on March 31. But a relentless rise in inflation could forcing them to raise interest rates again after the vote. Türkiye’s key interest rate is currently at 45%, following a cumulative increase of 3,650 basis points since May 2023.
“Hopefully, the favorable effects in the base period will start to generate a better cycle from mid-year,” Ash wrote. However, CBRT may need to increase policy rates further after local elections.”
