Inflation in September above 12%: Surveys

TURKISH consumer price inflation is expected to have risen above 12% again in September, when the central bank hiked its policy rate to counter price rises, according to surveys.

Annual inflation last stood above 12% in June and then dipped slightly below it in the last two months. It came in a bit lower than expected at 11.77% year-on-year in August, according to the official data.

On Tuesday, the government revised its yearend inflation expectation to 10.5%, citing increased unit costs and pass-through effect from exchange rates.

The median estimate for September’s annual inflation in a Reuters poll of 12 economists was 12.13%, with estimates ranging between 11.79% and 13%.

On a monthly basis, inflation was expected to be 1.35%, with forecasts between 1.01% and 2.10%.

A panel of 14 economists polled by Anadolu Agency (AA) expected the inflation to rise to 12.20% in the month.

The consumer price index survey ranged between 0.94% at its lowest and 2.10% at its highest – an average of 1.38% monthly increase.

Food prices showed the largest increase in September but prices rose across the board with the impact of a weaker lira, said İş Yatırım economist Dağlar Özkan.

“We foresee the inflation trend in the final quarter to be similar to last year but October to be significantly higher due to the exchange rate,” he told Reuters, adding that year-end inflation would depend on the pace of monetary tightening by the central bank.

To counter sticky inflation, the Central Bank of the Republic of Turkey (CBRT) last week unexpectedly hiked interest rates by 200 basis points to 10.25%, tightening policy for the first time in two years, saying a fast recovery from the initial coronavirus shock had kept prices too elevated.

The policy rate had been held at 8.25% since May – in the middle of Turkey’s coronavirus lockdown – following a nearly yearlong aggressive easing cycle that chopped it down from 24%.

The central bank in July raised its year-end inflation forecast to 8.9% from 7.4%. It said the 1.5 percentage-point increase was driven by an upward revision in oil prices and food inflation projections.

In the minutes of last week’s policy-setting meeting, the bank Thursday said that pandemicdriven, supply-side inflationary effects persisted while the reopening of the economy was progressing gradually.

The median estimate of eight economists in the Reuters poll for inflation at year-end was 11.70%. Estimates ranged between 10.5% and 13%.

The AA survey predicts the year-end inflation at 11.86%, in an average taken from estimates ranging between 10.90% and 13.40%.

The Turkish Statistical Institute (TurkStat) is scheduled to announce September inflation data on Monday, Oct. 5 at 0700 GMT.