Turkey's inflation jumps to 20-year high as energy prices surge

Turkey's annual consumer inflation leapt to a 20-year high of 61.14% in March, data showed on Monday, fuelled by rising energy and commodity prices as the fallout of the Russia-Ukraine conflict compounds the impact of the lira's plunge last year.

Inflation has surged since last autumn, when the lira slumped after the central bank (CBRT) launched a 500 basis-point easing cycle sought by President Tayyip Erdogan.

Month-on-month consumer prices rose 5.46%, the Statistical Institute said, just below a Reuters poll forecast of 5.7%. The annual consumer price inflation forecast was 61.5%.

“CBRT policies are just not working in countering inflation,” said Tim Ash at BlueBay Asset Management. Indeed, I think the overwhelming consensus is that the unorthodox policy settings of the CBRT are a major cause of inflation.

“The war in Ukraine is just making things that much worse,” Ash added, nothing the bank had not hit its annual inflation target of 5% since 2011.

The data had little impact on the lira, which weakened 0.15% to 14.715 against the dollar. The local currency tumbled 44% in 2021 and another 10% this year. Please download WikiFX for more forex news.