Turkey’s annual inflation rate rose more than expected to nearly 70% in April, a fresh 20-year high, official data showed Thursday, fuelled by the Russia-Ukraine conflict and rising energy and commodity prices.
The consumer price index (CPI) surged an annual 69.97% last month, the Turkish Statistical Institute (TurkStat) said, the biggest year-over-year increase since 2002 and up from 61.1% in March. The annual consumer price inflation was forecast to be around 68%.
Month-on-month, consumer prices rose 7.25%, the institute said, compared to an average market forecast of 6%.
Elsewhere, inflation in the U.S. hit a fresh 40-year high of 8.5% last month, and in the 19 countries using the euro currency, it hit a record-high 7.5%.
Also, Britain’s inflation rate rose to a 30-year high of 7% in March, more than triple the central bank’s target of 2%. The Bank of England (BoE) on Thursday revised up its forecasts for price growth to show it peaking above 10% in the last three months of this year.
Russia’s invasion of Ukraine, which led to a surge in gas, oil and grain prices, has compounded the situation in import-reliant Turkey.
The annual surge in consumer prices in April was driven by a 105.9% leap in the transportation sector, which includes energy prices, and an 89.1% jump in food and non-alcoholic drinks prices, the data showed.
A core index stripping out the impact from volatile items, including food and energy reached 52.4%, up from 48.4% the previous month.
Month-on-month, food and non-alcoholic drink prices rose the most with 13.38% and house prices rose 7.43%.
Inflation has surged since last autumn as the lira weakened after the central bank in September embarked on a 500-basis point-easing cycle.
The government has said inflation will fall under its new economic program, which prioritizes low interest rates to boost production and exports with the goal of achieving a current account surplus.
Inflation has continued to rise despite tax cuts on basic goods and government subsidies for some electricity bills to ease the burden on household budgets.
President Recep Tayyip Erdoğan told reporters last week that inflation would begin to recede as of May and reach a "more favorable direction" at the end of the year.
Treasury and Finance Minister Nureddin Nebati on Monday brushed aside concerns, saying that the current inflationary trend was fleeting and would "not spread over the long term and be permanent."
"We will increase the welfare and purchasing power of our citizens over the past level," he said.
The Central Bank of the Republic of Turkey (CBRT) last week revised up its inflation forecasts for this year and the next mainly because of the rise in commodity prices and supply issues.
It forecast annual inflation will peak at around 70% by June before declining to near 43% by year-end and single digits by end-2024.
The central bank held its key policy rate steady at 14% in four meetings this year and said measures and policy steps will prioritize so-called liraization in the market.
The domestic producer price index climbed 7.67% month-on-month in April for an annual rise of 121.82%.