Turkey’s consumer price inflation rate climbed to 15 percent in January, extending the highest level since August 2019 and exceeding economists’ forecasts.
Inflation accelerated from 14.6 percent in December, the Turkish Statistical Institute said on Wednesday. The price increases were led by household furniture and food and non-alcoholic beverages. Producer price inflation edged up to 26.2 percent from 25.2 percent.
The Turkish central bank has more than doubled its benchmark interest rate to 17 percent over the past five months to help rein in inflation and to defend the lira, which slid to successive record lows last year. On Monday, the bank urged decisive steps from the government and other stakeholders to help tackle rising prices.
Turkey’s inflation rate was expected to increase to between 14.7 percent and 14.8 percent, according to three polls of economists by Reuters, Bloomberg and the state-run Anadolu news agency.
On a month-on-month basis, prices rose by 1.68 percent, the institute said. Food prices climbed by 2.48 percent.
Central bank rate hikes have drawn in moderate flows of foreign capital, helping to stabilise the lira, and the policy mix has improved, ratings agency Fitch said in a report on Tuesday. But the bank has limited independence and the government’s combined goals for inflation, economic growth and the current account deficit lack credibility, it said.
The lira was trading up 0.7 percent at 7.13 per dollar after the data was released. It hit a record low of 8.58 per dollar in early November.
Rapid credit expansion last year, lira weakness and rising commodity prices have hurt the inflation outlook, the central bank said on Monday. The government ordered state-run banks to lend to consumers and businesses at below market rates during 2020 to help spur stimulate economic activity.
Turkish President Recep Tayyip Erdoğan sacked and replaced the head of the central bank in early November as the lira hit its all-time low. He also hired a new treasury and finance minister after his son-in-law Berat Albayrak resigned the same month.
The government has since pledged economic reforms designed to encourage investment. It targets consumer price inflation of 9.9 percent this year and economic growth of 5.8 percent in an economic programme published in late September. The current account deficit, which widened to more than 5 percent of GDP in the 12 months to November, is expected to narrow to 1.9 percent of GDP in 2021, it said.