The Annual Inflation Rate In Turkey Rose To Nearly 65% In January

(CTN News) – Turkish inflation increased a little in January, but prices soared a lot in January, mainly due to a big increase in the minimum wage and new year price updates, according to official data released Monday after the central bank shuffle.

Turkish Statistical Institute (TurkStat) says consumer prices rose 64.86% last month, up from 64.77% in December.

After rising 2.93% in December, consumer prices increased 6.7% month-over-month, the institute said. Treasury and Finance Minister Mehmet Imşek attributed the spike in monthly inflation to “temporary effects” and said it would dip back down to target.

Imşek wrote on social media platform X, formerly known as Twitter, “We don’t expect these effects to affect inflation.”.

Hotels, cafes, and restaurants jumped 92.27%, and transportation charges jumped 77.54%. Food prices alone rose 69.71% from last year, and health care costs increased 78.57%.

Health, hotels and restaurants showed the biggest monthly price increases, followed by other goods and services.  It came after Hafize Gaye Erkan unexpectedly resigned as governor of the central bank on Friday, citing media smears against her family.

To cool inflation, she raised interest rates to 45% from 8.5% since June.

After last year’s elections, Turkey adopted more conventional policymaking aimed at reducing trade deficits, rebuilding foreign exchange reserves, and stabilizing the Turkish lira.

He’s been sworn in as Erkan’s successor, Fatih Karahan, a former deputy at the central bank who orchestrated the tight monetary policy. After 3,650 basis points of hiking since June, the central bank said last month it’s reached a level to ensure disinflation.

Inflation could exceed 36% by the end of the year, according to Bürümcekçi Consulting founder Haluk Bürümcekçi.

The market doesn’t seem to like the new monetary policy stance that has emerged after the last MPC meeting. However, we think the messages conveyed by the bank in the last MPC meeting were sound,” Bürümcekçi said.

As part of his first remarks, Karahan said price stability was the priority, and a strong team would ensure disinflation.

On Thursday, he’ll hold a briefing on the first inflation report of the year in Ankara. We’re waiting to see if and how much the bank raises year-end inflation expectations. A Reuters poll had predicted a 6.5% rise in the CPI. According to the poll, the CPI will rise until midyear, then dip after May.

AA predicted a 6.84% increase for the month and 65.07% for the year. Imşek said on Monday that keeping prices stable is the most important thing.

“We expect monthly inflation to decrease significantly starting in February,” he said. “We’ll see a significant drop in inflation in the second half.”

The statistical office reported producer prices rose 44.2% in January, almost the same as December’s 44.22% increase. It’s up 4.14% over the past month.

SEE ALSO:

Silver Prices Will Outperform Gold In 2024, Says UBS, With Prices Hitting $2,200