Turkey’s annual inflation rate is expected to increase by another seven percentage points in March to 61.5 percent, due to the impact of Russia’s invasion of Ukraine and rising commodity prices, a according to a Reuters poll published on Monday.
Inflation in the country, which currently registers at 54.4 percent, will only drop as low 52.2 percent by the year end, according to poll based on the media estimate of 17 institutions.
The Russia-Ukraine war, which has entered its fifth week, has prompted economists to mark-up global consumer price inflation. Natural gas prices have spiralled to multi-year highs amid sanctions against Russia, from which Turkey receives a third of its natural gas supplies.
Turkey’s consumer confidence grew in March, increasing for the second month in three while inflation in the country has surged to two-decade high, after the central bank cut interest rates to 14 percent late last year on the orders of President Recep Tayyip Erdoğan.
The move was followed by a downward spiral in the lira, which slid to successive record lows against the dollar, pushing up the cost of imports. The central bank has kept rates on hold since January despite a jump in prices.
Turkey’s Treasury and Finance Minister Nureddin Nebati last week said that the lira had hit its floor against the dollar and had “no where to go,” as he forecasted the currency would remain stable after the government introduced special bank deposits linked to the value of the dollar.
The media estimate for annual inflation of the institutions featured in the poll was 61.5 percent, Reuters said, with forecasts ranging between 58.25 and 62.7 percent.
Economists foresee that inflation will remain high for the remainder of the year, Reuters reported, citing the regional conflict, in which Turkey has stepped up as a mediator.
“We expect inflation to remain around or above 60 percent until the last month of this year,” it cited J.P. Morgan as saying. “This means that the real interest rate will be deeply in the red for a long time,” in a development that also “leaves the lira vulnerable.”
March inflation data for Turkey is set to be announced by the Turkish Statistical Institute at 0700 GMT on April 4.