Turkey’s inflation rises over estimates in September

Turkey’s inflation rises over estimates in September

Turkey’s inflation rises over estimates in September

Reuters Photo

Turkey’s annual consumer inflation rate rose above estimates to 7.95 percent in September, data showed on Oct. 5, increasing concerns about the economic outlook ahead of a Nov. 1 election.

The consumer price index (CPI) rose 0.89 percent month-on-month in September, the Turkish Statistics Institute (TÜİK) said. It rose 7.95 percent year-on-year, much higher than the government target of 5 percent.

The September price rises were driven up by food and non-alcoholic beverages, which rose 1.24 percent, along with transportation and miscellaneous goods, and services sectors which were up 1.93 percent. 

The greatest price fall was for clothing and footwear, which saw a 2.76 point drop.

The central bank’s midpoint year-end inflation forecast now stands at 6.9 percent, up from 6.8 percent in its last report. It left its 2016 midpoint forecast at 5.5 percent in its last inflation report released in July. 

Emrah Birol, an Istanbul-based economist with GCM Securities, said rising inflation was a major concern in Turkey’s economy.
“Generally in emerging economies such as Turkey, inflation targets are set around 2 percent,” he said, as quoted by Anadolu Agency. 

“Some developed economies try to boost inflation to 2 percent. In this context, we are struggling to stem inflation with no success,” he added. 

More concerning than the rise in the headline figure was the increase in core inflation, said Muammer Kömürcüoğlu, an economist at İş Investment, as quoted by Reuters. 

The core figure reflects the impact of the ailing Turkish Lira, which has hit a series of record lows against the dollar.

“We think the worsening in inflation expectations will continue,” he said. “We think the pressure on the Central Bank will increase,” Kömürcüoğlu told Reuters.

Turkey’s central bank left its benchmark one-week repo rate steady at 7.50 percent on Sept. 22, as expected, and repeated its guidance that “future monetary policy decisions will be conditional on the improvements in the inflation outlook.”

Turkey’s lira has become one of the worst performers in global markets, losing more than 25 percent of its value against the dollar this year.