Turkey reports annual inflation of 36 percent, highest in two decades

The government-run Turkish Statistical Institute (TÜİK) has reported an annual inflation rate of 36.1 percent in December, the highest in two decades, whereas the independent inflation group ENAG put the figure at 82.8 percent.

Duvar English - Reuters 

Turkey's annual inflation jumped far more than expected to 36.08% year-on-year in December, the highest since September 2002, data showed on Jan. 3 reflecting a plummet in the value of the lira late last year.

Month-on-month, consumer prices rose 13.58%, the Turkish Statistical Institute (TÜİK) said. The annual inflation forecast was 30.6%.

According to unofficial data from the ENAG Inflation Research Group, an independent institution set up in 2020 to track the country’s inflation, Turkey’s annual consumer price inflation rate was 82.8% in December, far higher than official claims. ENAG also said that prices in Turkey increased by 19.35% percent month-on-month in December.

The lira was trading at 13.6 against the dollar after the data, 3% weaker on the day but off an early low of 13.92. It shed 44% of its value last year after a volatile November and December.

The producer price index rose 19.08% month-on-month in December for an annual rise of 79.89%, the TÜİK data said, reflecting soaring in import prices due to the currency crash.

It was the highest CPI annual since the 37.0% of September 2002, before President Recep Tayyip Erdoğan's Justice and Development Party (AKP) first came to power in November of that year. The forecasts of 13 economists ranged between 26.4% and 37.3%.

Consumer prices were led higher by transport prices, which soared 53.66% year-on-year, while heavily-weighted food and drinks prices jumped 43.8%.Inflation has been around 20% in recent months, driven by a lira slide to record lows after the central bank slashed its policy rate by 500 basis points since September, under pressure from Erdoğan.

The central bank has said temporary factors were driving prices higher and forecast that inflation would follow a volatile course in the short term.

The lira hit a record low of 18.4 against the dollar in December before rebounding sharply the week before last after state-backed market interventions and after Erdoğan announced a scheme to protect lira deposits against currency volatility.