Turkey inflation hits highest level since 2003

AFP
Merchants wait for customers at the historical Grand Bazaar in Istanbul. (Reuters)

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.