Turkey Inflation above 16% in Test for New Cenbank Chief
Turkey
Inflation above 16% in Test for New Cenbank Chief
Turkey's
annual inflation climbed above 16% in March for the first time since mid-2019,
data showed on Monday, piling pressure on new central bank governor Sahap
Kavcioglu to maintain tight policy after his surprise appointment.
Consumer
prices were up 16.19% year-on-year, higher than 16.11% in a Reuters poll and
15.61% in February. Inflation remains well above a 5% official target and has
been in double digits for most of the past four years.
Month-on-month
CPI inflation was 1.08%, the Turkish Statistical Institute said, compared to a
Reuters poll forecast of 1.04%.
The
former central bank governor, Naci Agbal, had raised the policy rate to 19%
from 10.25%. But he was ousted on March 20 - after only four months on the job
and two days after a last rate hike - prompting a 12% drop in the lira to near
record lows.
President
Recep Tayyip Erdogan has abruptly ousted four bank chiefs in less than two
years, hurting Turkey's monetary credibility and contributing to the currency's
long-term decline, which in turn has driven up overall inflation via imports.
Kavcioglu
has in the past criticized tight policy, including making the unorthodox claim
shared by Erdogan that high rates cause inflation. Yet he has told investors
and bankers in recent weeks rates must remain high due to high inflation.
The
producer price index rose 4.13% month-on-month in March for an annual rise of
31.2%, the data showed.
The
monthly CPI price rise was underpinned by demand in the health, education and
hospitality groups, including restaurants, after coronavirus measures were
eased.
Annual
rises were driven by higher energy and import prices which raised
transportation-related prices by nearly 25%.
According
to a February forecast, the central bank expected a maximum of 17% inflation in
March and a bit more in April.
Analysts predict it will rise through April, when Goldman Sachs expects it to peak at 18%.
