Turkey's inflation seen jumping to 53% in February
By Ezgi Erkoyun3 minute read
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- End-2022 inflation seen at 38%
Turkey's consumer price index has surged since last fall as the lira weakened after the central bank in September embarked on an easing cycle long sought by President Tayyip Erdogan.
The unorthodox rate cuts, that saw the policy rate slashed by 500 basis points to 14%, led to a currency crisis that caused the lira to lose 44% of its value against the dollar last year.
The lira's decline sent inflation soaring to nearly 50% last month, its highest level under Erdogan's nearly 20-year rule, as Turkey hiked prices across the board, from road tolls to electricity.
Economists see it rising further in February, with the median estimate of 14 participants in the Reuters poll standing at 52.95%, in a range of 51.9% and 55.40%.
The median estimate for the monthly CPI was 3.80%, with predictions ranging between 3.1% and 5.50%.
Turkey lowered value added tax on food to 1% from 8% in February to fight inflation, which economists expect to lower annual inflation by 150 basis points in two months.
A unions confederation calculated that despite the VAT cut food prices increased by 7.1% in February in the capital Ankara.
Reuters Graphics
However, economists see it rising further in coming months, due to risks over commodity prices and agricultural production, with some seeing it peaking around May and remaining elevated throughout the year.
The government, following a new economic programme that prioritises low rates for production and exports to achieve lower inflation, sees it falling to around 24% at the end of 2022.
A chart shared by the central bank in January showed it expects inflation to approach 50% in January, peak near 55% in May and then drop sharply in the third quarter.
The median estimate of 17 economists for annual consumer inflation at year-end stood at 38%, rising from 35% in a poll last month, with forecasts ranging between 24.00% and 52.60%.
Russia's invasion of Ukraine has also raised concerns of further inflationary pressure in Turkey, an importer of oil, natural gas and grains, the prices of which have surged due to the conflict. Economists see continued upward pressure on the producer price index, after it exceeded 90% in January.
The Turkish Statistical Institute will released February inflation data at 0700 GMT on March 3.
Turkey's inflation seen jumping to 53% in February
Turkey's annual inflation is expected to rise to nearly 53% in February, the highest in 20 years, as rising food and energy prices continue to push prices higher, a Reuters poll showed on Friday.
