Turkish Inflation Climbs to Fresh 20-Year High on Lira, Energy

(Bloomberg) -- Turkey's inflation jumped to a fresh 20-year high in February, driven by a weak lira and a surge in energy and food prices.

Consumer prices rose an annual 54.4% through last month, up from 48.7% in January. The median estimate in a Bloomberg survey of 22 analysts predicted an acceleration to 52.5%.

Monthly inflation was 4.8%, compared with the median estimate of 3.75% in a separate survey.

Below are the highlights of the inflation report published by Turkstat on Thursday:

Producer prices rose 7.2% through the month, bringing annual inflation to 105%
The rate of inflation in energy stood at 83% from 76.4% in January, led by gasoline and power costs. Turkey has recently cut taxes on household power consumption but the impact will only be seen from March
Annual price gains in food, which makes up roughly a quarter of the consumer basket, accelerated to 64.5% from 55.6%, even after the government cut taxes on food
A core inflation index, which strips out the impact from volatile items such as food, energy and gold, rose to 44.1% from 39.5% in January

Markets

The lira was trading 0.7% lower at 14.1268 per dollar as of 10:05 a.m. in Istanbul

Background

The acceleration takes Turkey's benchmark interest rate adjusted for inflation to around negative 40%, the lowest real yield by far among emerging markets
Retail price inflation in Istanbul, Turkey's commercial capital, climbed to 55.3% last month from 50.9% in January
The central bank will hold its next rate-setting meeting on March 17
Turkey's central bank held rates for a second month in February after it slashed 500 basis points in late 2021. The cuts sent the lira into a tailspin that's accelerated consumer price rises. Although lira sustained stability earlier, the local currency lost around 5.8% of its value against the dollar this year with investors avoiding riskier assets amid a slew of sanctions imposed on Russia over its war on Ukraine