Daily Management Review

Turkey's inflation accelerates for the third month in a row


Inflation in Turkey accelerated in January for the third month in a row, exceeding analysts' expectations.

Consumer prices in Turkey rose 12.15% in annual terms in January after rising 11.8% in December 2019, according to the Turkish Statistical Institute.

Analysts surveyed by Bloomberg on average predicted inflation acceleration to 11.9%.

Compared to the previous month, consumer prices in January rose 1.35%.

Acceleration of inflation in January occurred due to the dynamics of prices for alcohol and tobacco products, which jumped by 42.2% in annual terms.

Rising food prices in January slowed to 9% from 10.9% in the previous month. Now the growth rate is below the forecast of the central bank (11%).

The basic index, which does not take into account the volatile prices for food and energy, rose to 9.9%.

Monthly producer price growth accelerated in January to 1.8% from 0.7%.

Acceleration of inflation may force the Central Bank of Turkey to suspend the easing cycle of monetary policy.

In January, the regulator lowered its weekly repo rate from 12% to 11.25%, which was the most restrained step since the beginning of easing monetary policy in July. 

Inflation fell from a peak above 25% after the currency crisis of 2018, as a result of which the Turkish lira fell by almost 30%. The recession that followed led to the fact that in 2019, economic growth almost stopped. The central bank responded to the crisis by raising the rate to 24%, where it remained until July last year.

The next meeting of the Central Bank of Turkey on monetary policy will be held on February 19.

source: reuters.com