Turkey’s inflation hits two-decade high of 70%

Istanbul Turkey’s annual inflation jumped to 69.97% in April, above forecast and at a two-decade high, according to data on Thursday, fueled by the Russia-Ukraine conflict and rising energy and commodity prices after last year’s lira crash.

The currency slide was triggered by a 500 basis point interest rate easing cycle which began last September under pressure from President Tayyip Erdogan, triggering the sustained surge in consumer prices.

Month-on-month, consumer prices rose 7.25%, the Turkish Statistical Institute said, compared to a Reuters poll forecast of 6%. Annually, consumer price inflation was forecast to be 68%.

The surge in consumer prices was driven by a 105.9% leap in the transportation sector, which includes energy prices, and a 89.1% jump in food and non-alcoholic drinks prices, the data showed.

Month-on-month, food and non-alcoholic drink prices rose the most with 13.38% and house prices rose 7.43%.

The government has said inflation will fall under its new economic programme, which prioritises low interest rates to boost production and exports with the goal of achieving a current account surplus.

However, economists see inflation remaining high for the rest of 2022 due to the Ukraine war.