Facebook Blogging

Edward Hugh has a lively and enjoyable Facebook community where he publishes frequent breaking news economics links and short updates. If you would like to receive these updates on a regular basis and join the debate please invite Edward as a friend by clicking the Facebook link at the top of the right sidebar.

Tuesday, June 03, 2008

Turkey Inflation May 2008

Turkish inflation was back in double digits last month, and for the first time in more than a year, adding to expectations of an early rate hike.





The Turkish Statistics Institute (Turkstat) said the consumer price index rose 1.49 percent month on month to an annual rate of 10,74%. The producer price index rose 2.12 percent month-on-month, with an annual rise of 16.53 percent.




Core inflation was also well above the central bank's year-end target of 4 percent.


The central bank raised its benchmark interest rate last month to 15.75 percent, reversing an easing cycle to hike for the first time since 2006, and has signalled it could tighten further.

As elsewhere, Turkey is suffering from the effects of food and oil price rises and the central bank has said it will take measures to prevent second-round effects.
But other factors also pushed the index higher in May.


Prices of clothing and shoes rose 11.99 percent month-on-month, while restaurant and hotel prices rose a higher-than-average 1.66 percent in the month. Stripping out energy, food, drinks, tobacco and gold, the CPI rose 6.30 percent year-on-year in May, Turkstat said.

Headline May inflation was also above a year-end forecast of 9.3 percent given by the central bank as recently as April. The bank forecasts inflation will end next year at 4.9-8.5 percent.

Inflation expectations have also continued to deteriorate, according to the central bank's twice-monthly surveys of economists and business leaders. In its latest poll, consumer price inflation was seen ending the year at 9.64 percent, and at 7.88 percent in 12 months' time.


Adding to inflation concerns, the lira has weakened as much as 14 percent this year, although high interest rates have helped it trim its losses back to 4.5 percent. The lira was broadly flat after the inflation data release.

No comments: