Turkish inflation dips to near 50% as elections approach

Turkish inflation dips to near 50% as elections approach
Inflation has been stoked by a currency crisis at end-2021 that pushed it to a 24-year peak above 85 percent in October. (Shutterstock)
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Updated 03 April 2023
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Turkish inflation dips to near 50% as elections approach

Turkish inflation dips to near 50% as elections approach

ISTANBUL: Turkish annual consumer price inflation dropped to 50.51 percent in March, official data showed on Monday, slightly below forecast and easing ahead of landmark presidential and parliamentary elections on May 14.

Inflation has been stoked by a currency crisis at end-2021 that pushed it to a 24-year peak above 85 percent in October, before dipping with a favorable base effect to 55.2 percent in February.

The surging prices have hit household earnings and hurt President Tayyip Erdogan's popularity, making the May elections his biggest-ever political challenge.

The lira weakened slightly to 19.2020 against the dollar after the data, from 19.9600 beforehand. It has touched a series of intraday record lows in recent days.

March consumer prices rose 2.29 percent from a month earlier, less than a predicted 2.85 percent in a Reuters poll.

Consumer price rises in March were led by the restaurant and hotel sector which surged 70.7 percent year-on-year, closely followed by a 67.9 percent rise in key food and non-alcoholic drinks prices.

Turkiye's southeast region was hit almost two months ago by massive earthquakes which killed more than 50,000 people in Turkiye and left millions homeless. The earthquake is expected to cost Turkiye more than $100 billion and shave one to two percentage points off growth this year.

Last month, Turkiye's central bank kept its policy rate steady after easing to 8.5 percent to support growth and employment in the wake of the disaster.

Erdogan has urged monetary stimulus in recent years, aiming to achieve price stability by slashing borrowing costs, boosting exports and turning current account deficits to surpluses.

The poll had forecast that consumer prices would be up 51.3 percent from a year earlier, and were expected to end the year at 46.5 percent.

The domestic producer price index was up 0.44 percent month-on-month in March for an annual rise of 62.45 percent, according to the data from the Turkish Statistical Institute.