Turkey’s consumer inflation last month climbed to one of the highest levels since Turkish President Recep Tayyip Erdogan came to power 15 years ago, spurring calls for higher interest rates to rein in prices.
The inflation rate rose for a sixth month to 24.5 percent from a year earlier, above all expectations in a Bloomberg survey where the median estimate was 21.1 percent.
The monthly rate was 6.3 percent, driven by an across-the-board spike provoked by the lira’s meltdown.
Turkish Minister of Finance and Treasury Berat Albayrak blamed hoarders and speculators, and predicted inflation would stop quickening next month.
Yesterday’s inflation report puts monetary policymakers in a bind. The central bank raised borrowing costs last month to their highest level in nearly two decades, yet prices are gaining at their fastest pace since June 2003.
Given Albayrak’s distaste for higher interest rates and an apparent slowdown in the economy, the bank has little room to act against further price surges.
However, with the lira losing as much as 40 percent of its value against the dollar since the beginning of the year, the worst may be yet to come.
“An inflation print so bad that it truly feels like old Turkey,” said Inan Demir, an economist at Nomura International in London. “But this is simply too bad to ignore. Note that annual headline inflation is now above the bank’s policy rate at 24 percent, which calls for another rate hike.”
The lira weakened as much as 1.6 percent after the data release.
The inflation rate is almost five times the central bank’s target of 5 percent and almost double its forecast for this year.
Speaking after the data release in a prearranged interview with NTV, Albayrak attributed much of the increase to hoarding and speculative pricing by businesses taking advantage of volatility.
Officials would start meeting tomorrow with representatives of various sectors of the economy for a new framework to curb prices that the government would likely announce next week, he said.
“The current trend will be broken in October,” Albayrak said.
Nigel Rendell, a London-based senior analyst at Medley Global Advisors, said the inflation figure was “a shocker,” but maintained some optimism that weak consumption might offset inflationary pressures at some point.
“Interest rates of 24 percent provide some protection, and there is a sense that the weakness of domestic demand will be the dominating disinflationary force in a few months’ time once the foreign exchange pass-through has fed its way through the system,” Rendell said.
What might worry policymakers is the pace at which consumer inflation is catching up with producers’ rising costs, BlueBay Asset Management LLC strategist Tim Ash said.
Producer prices last month rose by more 10 percent from August, bringing the annual increases to more than 46 percent.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last