Inflation in Turkey escalated to a peak of 16 months in March due to a surge in non-food prices, as disclosed by official statistics recently.
The Turkish Statistical Institute reported that consumer price inflation increased to 68.50 percent in March compared to 67.07 percent in the previous month, February. By category, education costs led with the most substantial annual rise of 104.07 percent. This was followed by the sectors of hotels, cafes, restaurants, and healthcare. Despite the overall rise, clothing and footwear, with a 50.10 percent increase, reported the smallest annual rise.
These figures are a clear demonstration of the persistent price pressure in non-food categories, affirming the challenges of the disinflation process, according to ING economist, Muhammet Mercan.
In contrast, consumer prices grew by 3.16 percent monthly, which is slower compared with the 4.53 percent increase in the preceding month. Mercan noted that the inflation data for April and May will be vital in determining the aftermath of the recent tightening of the central bank.
Within this framework, the central bank is expected to sustain its firm stance and maintain high funding costs, nearly in line with the upper limit of the interest rate corridor. In pursuit of reducing core inflation and returning it to the target of 5 percent over the long term, the central bank increased its policy rate severely by 500 basis points to 50.0 percent in March.
Additional data from the statistical office revealed that producer prices experienced an annual growth of 51.47 percent in March, a significant leap from 47.29 percent rise in February. This increase is the most rapid rate since the previous April. Regarding the month-on-month metrics, the producer price index rose by 3.29 percent after a 3.74 percent increase.
