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Turkey's monthly measure of consumer prices increased in March by 0.66 percent over February, bringing the annualized Consumer Price Index (CPI) to 7.29 percent, the Turkish Statistics Institute (TurkStat) announced on Wednesday.
Turkey's annual inflation rose to 7.29 percent in March, driven by sharp rises in food and beverage prices, the Turkish Statistics Institute (TurkStat) reported on Wednesday.
Inflation edged up steadily in 2013 after dropping in the latter half of 2012, and showed a 0.66 percent rise in March over inflation in February. TurkStat cited a 2.04 percent increase in food and non-alcoholic beverages over the previous month as a chief cause for the rise.
The greatest annual increase in consumer prices was seen in alcohol and tobacco products, which have risen 16.31 percent since last March. The price of housing, electricity and fuel -- which TurkStat averages into one bundle of goods -- showed a 9.84 percent rise. The government imposed sweeping fuel and electricity price hikes last year to counter a growing budget deficit. Average prices for restaurants and hotels, meanwhile, rose 9.4 percent over the year, while food and non-alcoholic beverages rose 8.1 percent.
Rising inflation rates in the year's third month make it less likely for the central bank to meet its target of 5.3 percent inflation during the year, a number which the International Monetary Fund (IMF) has said will likely be closer to 6.2 percent this year.
HSBC Portfolio Strategist Ali Cakiroglu told the Anatolia news agency on Wednesday that the growth was slightly above his bank's predictions for inflation, and said the “upwards trend carries the risk of continuing” throughout the year as consumer demand is expected to pick up, pushing up inflation. “The Wednesday inflation numbers are expected to have a negative effect on the market,” he said, suggesting that sustained inflation would likely push up bond yields.
Chief economist at Burgan Investment Haluk Burumcekci was more skeptical, suggesting to Anatolia that depressed food prices throughout 2012 were expected to rebound this year due to hikes in fuel costs and the effects of a prolonged and cold winter in Europe.
Turkish Agricultural Association (TZOB) head Semsi Bayraktar complained on Wednesday that the price hikes were due to rising transportation costs and the work of “middle men,” and said that food costs could rise later in the year if speculators think the risk is high of a global food shortage.
Efforts to reduce inflation are likely to be limited as the government seeks a way to restart growth of its slowing economy. TurkStat last week reported that annual growth for 2012 was just 2.2 percent, a number well under Ankara's expectations of around 3 percent growth, and a far cry from the 4 percent growth it is hoping for in 2013.
A return to faster growth rates would necessitate lower interest rates to loosen consumer spending, experts have said, suggesting that Turkish Central Bank Governor Erdem Basci's suggestion at a press conference on Wednesday that the economy will see “balanced growth” in 2013 is unlikely. The Turkish economy saw high inflation rates and an expanding trade deficit in 2010 and 2011, when annual growth was 9.2 percent and 8.5 percent, respectively.