Turkey’s sky-high inflation eased slightly in February, new figures showed on Monday ahead of a critical meeting of the country's central bank.
The consumer price index rose by 19.67 per cent year-on-year last month, down from 20.35 per cent in January.
Food prices remained the biggest driver of inflation, with a 29 per cent annual increase. But that figure was down slightly from 31 per cent in January following a campaign by president Recep Tayyip Erdogan against what he has termed food “terrorism.”
The country has struggled with high inflation following last year’s meltdown in the lira that followed the eruption of a bitter row with Donald Trump.
The currency, which lost close to 30 per cent of its value last year, has largely stabilised after a large interest rate hike by the central bank in September. However, it came under some pressure again last week amid concerns about inflation and about Turkey’s strained relations with the US.
The central bank’s monetary policy committee is due to meet on Wednesday for its last meeting before important local elections that take place on March 31.
Murat Cetinkaya, the bank’s governor, has vowed to tackle the country’s runaway inflation and last month promised to keep monetary policy tight until a “convincing” fall in price growth could be seen.
Most analysts expect that rates will remain on hold at 24 per cent after Wednesday’s meeting, despite a sharp slowdown in growth and a steep drop in lending by banks.
Alvaro Ortiz Vidal-Abarca, the chief economist for Turkey at the Spanish bank BBVA, said that the inflation data was going “in the right direction” but stressed the need for the bank to keep rates on hold to “reinforce its credibility.”
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