Turkey inflation jumps to 14 percent, highest in more than a year

ISTANBUL: Turkey's annual inflation rose to 14.03% in November, its highest since August 2019 and well above a 12.6% forecast as the lira weakened, keeping up pressure for tight monetary policy after a rate hike last month.

Ankara replaced its central bank governor last month as part of a promised economic policy overhaul, and the bank signalled it will more aggressively target inflation while Turkey grapples with fallout from a resurgence in coronavirus cases. Month-on-month, consumer prices rose 2.30% in November, data from the Turkish Statistical Institute showed on Thursday, compared with a Reuters poll forecast of 1.0%. In October, annual inflation stood at 11.89%. The lira's 25% fall to record lows early last month has made the country's hard-currency imports more expensive. The central bank targets 3% to 7% inflation but has overshot it by far more than emerging-market peers this year.

The surprise jump was driven by food and non-alcoholic drinks, which surged 21.08%, straining household budgets as pandemic fallout leaves more out of work. Miscellaneous goods and services prices jumped 29.42%.

Inflation had been near 12% since the beginning of the year, despite an economic downturn in the second quarter caused by measures to combat the initial coronavirus spread.

The new central bank governor, Naci Agbal, raised the key rate by 475 basis points to 15% at his first policy meeting, last month, and may face pressure to tighten again on Dec. 24.

Turkey's emerging-market peers all eased monetary policy on net this year, according to TD Securities. In a Reuters poll of 13 economists, the median estimate for annual inflation in November was 12.60%, with forecasts ranging between 12.30% and 13.08%. The lira weakened about 0.5% to 7.89 versus the dollar after the data. It has hit a series of record lows and touched 8.58 in early November before rallying on Ankara's promises of a new economic model.