Turkey announced that consumer price inflation accelerated to 16.2 percent in March and price increases are set to gather pace, according to Erdal Sağlam, a columnist for the Cumhuriyet newspaper.
Headline inflation will climb to at least 18 percent and could approach 20 percent, Sağlam said on Wednesday, referring to increases in producer prices, which rose to an annual 31.2 percent last month, and gains in core inflation, which now stands at 16.9 percent.
“The importance of these figures is that they show that consumer price increases will accelerate in the coming months,” he said. “While a decline in the lira of 10 percent in March has yet to be reflected in consumer prices, it has done so in producer prices, showing that it is inescapable that these two numbers will approach each other.”
Sağlam said that the government is continuing to put its foot on the pedal of economic growth, as shown in the loan market, where credit volumes are expanding. This will mean high economic growth in the second quarter of the year, but also shows that inflation will nudge higher, he said.
Sağlam said that there is currently no need for the central bank to increase the benchmark interest rate of 19 percent, but that governor Şahap Kavcıoğlu must act cautiously. The central bank next meets on interest rates on April 15.
“it is inevitable that inflation expectations will be negatively affected and that central bank governor Kavcıoğlu, who has claimed that he will “determine the policy rate according to expected inflation”, will have to be more sensitive in the upcoming period,” Sağlam said.
The central bank is targeting an annual inflation rate of 9.4 percent this year. Expectations for year-end inflation rose to 11.6 percent in March from 11.2 percent in February, according to a monthly central bank survey of finance industry professionals and business leaders.