Turkey’s annual inflation rate is expected to have hit 30.6 per cent in December, according to a Reuters poll.
The rate is breaching the 30 per cent level for the first time since 2003 as prices rose due to record lira volatility.
The 30.6 per cent median forecast of 13 economists would be the highest since May 2003 – with forecasts ranging from 26.4 per cent to 37.3 per cent.
Inflation, which was around 20 per cent in recent months, has been 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 President Tayyip Erdogan.
The month-on-month rise in prices was seen at nine per cent, according to the median, with forecasts ranging from 5.5 per cent to 14.6 per cent.
The central bank said temporary factors were driving prices higher and forecast that inflation would follow a volatile course in the short term.
The recent lira slide was reversed late on Monday last week when Erdogan announced a scheme to protect lira deposits against currency volatility and state-backed market interventions triggered a 50 per cent surge in the currency’s value.
Inflation has been in double digits and well above emerging market peers for most of the last four years, eating into Turks’ earnings and hitting support for Erdogan.
According to the Turk-Is trade union confederation, food prices rose 25.75 per cent month-on-month in December.
That represented an annual rise of 55 per cent, up from 27 per cent in November, marking the largest rise in food inflation since 1987.
The central bank’s year-end inflation forecast was 18.4 per cent in a report published in late October.
The government predicted end-2021 annual inflation of 16.2 per cent.
There could be double-digit monthly inflation in December as lira depreciation drives food, core goods and energy prices, said Gedik Yatirim economist Serkan Gonencler, adding that the lira rebound could prompt price cuts.
“However, raw materials purchased with higher costs, a possible New Year increase in energy prices and services inflation could limit the decline in inflation in January,’’ Yatirim said.
“Inflation could follow a rising trend with the delayed impact of the FX rates after January.’’
Four economists, who responded to a Reuters question forecast annual inflation would fall to 24.85 per cent by the end of next year.
The Turkish Statistical Institute is scheduled to announce December inflation data at 0700 GMT on Jan. 3.