Turkey inflation hits highest level since 2003

Merchants wait for customers at the historical Grand Bazaar in Istanbul. (Reuters)
Updated 04 December 2017
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Turkey inflation hits highest level since 2003

ANKARA: Turkey’s inflation in November hit its highest annual rate in 14 years at nearly 13 percent, according to official data released Monday.
Consumer prices rose 12.98 percent last month from the same period in 2016, the state statistics agency said, the highest annual rate recorded since December 2003.
Inflation had been 11.9 percent in October.
Monthly inflation meanwhile was up 1.49 percent in November from October, with transport, clothing and food showing strong rises.
The rise was sharper than analysts had predicted, and comes after the Turkish lira’s value against the US dollar declined by 13.5 percent since September.
Economists said that annual inflation would probably come down from December onwards but said it was still likely to remain in double digits.
Gokce Celik, chief economist at QNB Finansbank, said year-on-year inflation “is likely to spend the first half of the year (2018) above 10.5 percent.”
The Turkish central bank will hold its regular monetary policy committee meeting on Dec. 14 to decide on interest rates.
Liam Carson, Emerging Europe economist at London-based Capital Economics, said in a note the rise in inflation was “likely to prompt a rate hike next week.”
Economists agreed the bank needed to make a meaningful hike to interest rates but Inan Demir of Nomura International said this was “unlikely.”
“A large hike of several hundred basis points looks unlikely unless renewed (Turkish lira) depreciation pressures force the bank’s hand,” Demir said in a note.
The lira hit a record low of 3.97 against the greenback last month.
The Turkish currency was at 3.92 at 11.00 a.m. GMT on Monday.
Since the New York trial of a Turkish banker accused of violating US sanctions against Iran started last week, the lira has traded at more than 3.90 to the US dollar.
Turkish-Iranian gold trader Reza Zarrab, the prosecution’s star witness, admitted to being involved in a multibillion-dollar gold-for-oil scheme.
He also implicated President Recep Tayyip Erdogan in the scheme allegedly designed to subvert sanctions, and admitted to bribing a former Turkish economy minister.
A guilty verdict in the trial that Ankara calls a “plot” against Turkey could see one or more Turkish banks fined, a move analysts say would hurt the country’s economy.


Japan, EU sign landmark trade deal

Updated 3 min 41 sec ago
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Japan, EU sign landmark trade deal

  • Both sides are heralding the deal, which covers a third of the global economy and more than 600 million people
  • Besides the latest deal with the EU, Japan is working on other trade agreements, including a far-reaching trans-Pacific deal
The EU and Japan signed a sweeping free trade deal Tuesday that officials called a “clear message” against protectionism, as Washington imposes controversial tariffs and threatens a trade war.
The deal signed in Tokyo by the EU’s top officials and Japan’s Prime Minister Shinzo Abe is the biggest ever negotiated by the EU and creates a free trade zone covering nearly a third of the world’s GDP.
“We are sending a clear message that we stand together against protectionism,” EU Council President Donald Tusk said.
“Together we are making — by signing this agreement — a statement about free and fair trade, we are showing that we are stronger and better off when we work together,” added Commission head Jean-Claude Juncker.
The huge deal was signed as President Donald Trump unsettles allies and provokes rivals with his aggressive “America First” trade policy.
Both the EU and Japan have been hit with new US tariffs despite their longstanding alliances with Washington.
Juncker said the deal sent a message that “trade is about more than tariffs and barriers, it is about values.”
“There is no protection in protectionism,” he said.
Abe, standing alongside the two EU officials, said the agreement, “shows the world the unshaken political will of Japan and the EU to lead the world as the champions of free trade at a time when protectionism has spread.”