World Economy

Turkey Inflation at 13%, Highest Since 2003

Turkey Inflation at 13%, Highest Since 2003Turkey Inflation at 13%, Highest Since 2003

Turkey’s inflation in November hit its highest annual rate in 14 years at nearly 13%, according to official data.

Consumer prices rose 12.98% 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% in October, AFP reported.

Monthly inflation meanwhile was up 1.49% 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% 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%.”

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 on Monday.

Meanwhile, Turkish President Tayyip Erdogan said on Monday he was not requesting a limit on capital flows, clarifying comments he made on Sunday calling on the cabinet to block moves by businessmen “traitors” who tried to move assets abroad. In a speech in capital Ankara, Erdogan said businessmen need to take a patriotic stance as Turkey faces attacks on its economy, but there was nothing wrong with sending money abroad for investments.

“I am not making a request or an order to limit capital flows,” he said. “What I am saying is our businessmen need to take a domestic and national stance when our country is facing attacks and efforts to put our economy under pressure.”

“We have never had anything to say to those who are taking resources abroad for investments,” he said, clarifying that the “traitors” were those taking money abroad who were linked to Kurdish militants or supporters of the US-based cleric whom Ankara accuses of orchestrating last year’s coup.

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