Inflation in Turkey rises to 15%, signaling that CBRT will keep policy tight

Turkey’s annual inflation rose to 14.97% in January, beating forecast at 14.68% and monthly consumer prices also climbed above expectations, hitting 1.68% in January against consensus for 1.4% increase.

Fresh rise was fueled by food and energy prices, with electricity, gas and oil prices lifting the overall consumer price index, while the food prices, which hit the Turkey’s population particularly hard, rose 2.5% over the month and more than 18% in a year.

Data signal that Turkeys’ central bank will remain under pressure to keep tight monetary policy despite recent sharp interest rate hike, as the CBRT has raised its key rate from 10.25% to 17% after new governor was appointed in November, marking Turkey’s monetary policy the tightest among major developed and emerging economies.

The double-digit inflation in Turkey has been stuck in past three years, with policy tightening being stepped up through a more orthodox approach, as new economic team placing strong emphasis in communications on sustaining disinflation.