Turkey’s consumer inflation accelerated to the highest level in nearly 15 years as the lira’s unabated slide against the dollar fuelled price increases
The annual inflation rate rose to 15.4 per cent in June from 12.2 per cent the previous month, exceeding the median estimate of 13.9 per cent in a Bloomberg survey. That was the highest reading since October 2003. Turkey’s state statistics office said monthly inflation was 2.6 per cent, compared with 1.3 per cent forecast in a separate survey. The lira weakened.
While President Recep Tayyip Erdogan’s 24 June election victory capped an unbroken string of wins, he’s struggling to contain inflation. Consumer inflation started accelerating in the second quarter, putting more pressure on the central bank to raise rates in defiance of Erdogan, who holds the unorthodox view that higher borrowing costs fuel inflation. Non-financial companies’ heavy debt burden leaves them especially vulnerable to sharp spikes in the lira, which lost nearly two-thirds of its value in the last five years.
Below are some of the highlights from Tuesday’s inflation report:
The energy index, which tracks the price of power and refined oil products, rose 17 per cent from the previous year, compared with 15.2 per cent in May Core inflation, which excludes volatile items such as gold and energy, accelerated to 14.6 per cent, extending its record streak, according to Turkstat data going back to 2004 Food prices, which make up nearly a quarter of the consumer inflation basket, rose an annual 18.9 per cent, up from 11 per cent
The currency was 0.5 per cent weaker after the inflation report and was trading at 4.6417 per dollar at 10:06 a.m. in Istanbul.