Turkey inflation accelerates to 14.6 percent in challenge for central bank

Turkey’s consumer price inflation rate rose to 14.6 percent in December, exceeding economists’ estimates as it climbed for the third-straight month.

Accelerating price increases may keep pressure on the central bank to extend a series of interest rate hikes even after it more than doubled borrowing costs since September.

Inflation gained from 14 percent in November, led by an increase in the price of food, transportation and miscellaneous goods and services, which all rose by more than 20 percent annually, the Turkish Statistical Institute said on its website on Monday. Clothing and footwear were the only items to register a decrease.

Annual price rises, the highest since August 2019, were forecast at 14.2 percent, according to the median estimate in a Reuters poll of 14 economists last week. The predictions had ranged from 13.7 percent to 15.3 percent.

Turkey’s central bank has hiked its benchmark interest rate to 17 percent from 8.25 percent in September to rein in inflation and to defend the lira, which sunk to successive record lows during 2020. It next meets on interest rates on Jan. 21.

Central bank governor Naci Ağbal, appointed by President Recep Tayyip Erdoğan on Nov. 7, has vowed to keep borrowing costs high in 2021 to slow inflation to 5 percent in the medium term.

Annual producer price inflation accelerated to 25.2 percent last month, the highest level since May 2019, from 23.1 percent in November. Manufacturing price increases stood at an annual 27.3 percent.

The lira traded up 0.4 percent at 7.4 per dollar after the data was released, paring earlier gains. The currency hit a record low of 8.58 per dollar in early November.