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Turkey’s inflation headache just got a little bit worse.
Annual consumer prices rose by 11.29 per cent in March, the worst since 2008, and accelerating from 10 per cent as the economy battles with a plunging lira and rising global energy prices.
Inflation hit double digits for the first time since March 2012 last month, heaping pressure on monetary policymakers who have been trying to steady its weakening currency and support growth since the start of the year. The central bank targets inflation between a 3-7 per cent range, with the March reading coming in worse than the 10.7 per cent forecast.
The lira has managed to stabilise over the last few months after the central bank began tightening policy at the start of the year. Turkey’s currency is down 3 per cent this year, and has weakened more than 25 per cent since a failed military coup in July.
Food and alcohol were the biggest single drivers of higher prices last month, according to Turkstat – up nearly 22 per cent.
Turkey’s core inflation rate meanwhile, which strips out volatile effects such as energy and food, climbed to 9.46 per cent.
But in more encouraging news for the central bank, growth has managed to bounce back strongly – with latest fourth quarterly GDP figures showing the economy expanded by 3.5 per cent. This wiped out the 1.8 per cent quarterly slump in the three months prior – the worst contraction since the financial crisis.
*This post has been amended to reflect inflation is at its highest since 2008, not 2003 as previously stated