Turkish inflation rose high above expectations at 1.34 percent in April, bringing annual inflation to its highest level in two years, official data has shown.
The consumer price index announced by the Turkish Statistical Institute (TÜİK) on May 5 exceeded market expectations, which had been hovering at around 0.8 percent, driving the annual inflation rate to 9.38 percent from 8.39 percent the previous month.
Annual inflation has touched its highest level since April 2012, fuelling market expectations that it may hit double-digits in May.
The Central Bank and analysts foresee consumer prices rising at a record pace in May.
Central Bank Governor Erdem Başçı had said inflation was expected to touch its peak in May before starting to decline in June.
Inflation has been notably affected by the weakening of the Turkish Lira since May last year. Despite the heat of the currency having partially cooled down after the Central Bank’s massive interest rate hike and diminished political tension, inflation is predicted to come in far above the government’s 5 percent forecast for the year-end.
In its quarterly inflation report unveiled last week, the Central Bank raised its year-end inflation target to 7.6 percent from a previous forecast of 6.6 percent announced in its January report, indicating that the Bank’s view of the country’s inflation performance has not improved.
April inflation was mainly led by an unexpected increase in the clothing and shoes sectors, in which prices soared by 13.1 percent from the previous month.
When considered on an annual basis, transport witnessed the highest price increase at 13.84 percent.
Meanwhile, the dollar/lira ratio has started to decline after the announcement of the inflation data, as higher-than-expected figures are perceived as discouraging for a potential interest rate reduction from the Central Bank.
The lira strengthened to around 2.960 to the dollar, from pre-announcement level of 2.997.