Turkey's inflation set to continue rising until summer

Consumer prices reached highest level for nine months in April with increase set to continue until summer, Turkish cbank forecasts.

Turkey's inflation set to continue rising until summer

World Bulletin / News Desk

Inflation in Turkey increased in April to its highest level over the past nine months and is expected to continue rising until June, according to reports from Turkey's statistical authority and Central Bank.

The Consumer Price Index rose by 1.34 percent in April 2014 compared with March -- an increase of 9.38 percent on the same period last year, the Turkish Statistical Institute (TurkStat) reported Monday.

Meanwhile, the Domestic Producer Price Index (D-PPI) -- the change in prices faced by producers of goods and services -- increased by 0.09 percent in April compared to the previous month.

The increase represented a rise of 12.98 percent for the month compared to March last year.

A 13.84 percent annual rise in transport represented the highest increase in the CPI index, while a 13.82 percent rise in the cost of perishable consumer goods was the biggest factor in pushing up the D-PPI.

In comparison, inflation in the euro area, an economic and monetary union of the European Union member states that have adopted the euro as their common currency, is expected to be 0.7 percent in April 2014 compared to the same month in 2013.

Inflation was up from 0.5 percent in March of this year and the lowest rate since November 2009 and below the European Central Bank's two percent target, according to a flash estimate from Eurostat last Wednesday, the statistical office of the European Union.

The European Union's annual inflation was 0.6 percent in March 2014, down from 0.8 percent in February 2014.

Relatively stable inflation eased some economists' concerns about whether the euro bloc will suffer deflation, potentially derailing economic growth.

Turkey revised its annual inflation target for 2014 last Wednesday to 7.6 percent from 6.6 percent after the value of the Turkish lira has lost more than 30 percent in value against the U.S. dollar.

Erdem Basci, governor of the Turkish Central Bank, has earlier reiterated the bank’s commitment to maintain a tight monetary policy until the inflation outlook shows clearer signs of recovery.

"In this frame, with a 70 percent probability of success, we predict inflation to turn out to be between 6.4 percent and 8.8 percent -- with a 7.6 percent midpoint at the end of 2014," Basci has said.

Basci said the increase in imports and energy costs also affected the bank’s decision to raise the target.

Early this year, the Central Bank had said that inflation was expected to increase until June, partly reflecting base effects.

Last Mod: 05 Mayıs 2014, 11:00
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