Turkish inflation adds to woes | beyondbrics

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This was not a number the markets wanted to see, particularly after the upheaval in Turkey in recent weeks. The country’s inflation for the 12 months to the end of June hit 8.3 per cent, up from 6.5 per cent in May. “This increase is beyond anyone’s expectation,” wrote Ozgur Altug at BGC Partners in Istanbul in a note.

The lira flirted with the level of TL1.95 to the dollar, close to its all time lows, while the stock market also fell some 3 per cent from the previous day’s close by early afternoon.

In fact, core inflation remains relatively stable, at about 5.5 per cent, but rises in unprocessed food prices and energy price pressures due to the recent slide in the lira have stoked up the headline rate. The central bank target of 5 per cent inflation by the end of the year – which already seemed optimistic – now appears even harder to attain, with many analysts forecasting 7 per cent or more."

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