Turkey’s consumer price index is expected to rise to 12.6% in November, a Reuters poll showed on Tuesday, as a sharp decline in the value of the lira kept prices lofty.
Inflation has hovered around 12% since the beginning of the year, despite a sharp economic downturn in the second quarter due to strict measures against the coronavirus pandemic.
The central bank has signaled that it will target inflation more strongly under new governor Naci Agbal, who raised the policy rate by 475 basis points to 15% at his first rate-setting meeting last month.
In a Reuters poll of 13 economists, the median estimate for annual inflation in November was 12.60%, with forecasts ranging between 12.30% and 13.08%.
The median for the month-on-month rise was 1%, with forecasts ranging between 0.75% and 1.45%.
Enver Erkan, an economist at Tera Yatirim, said the most important factor for the uptick in inflation was the rise in the exchange rate.
He said the rise in production costs due to the exchange rate would gradually be reflected on consumer prices.
“The lira movement was quite stabilized in November… But the goods in stock were obtained at higher costs and therefore for the exchange rate effect to be eliminated, the stocks need to be depleted,” he said, adding that inflation is expected to end the year around the same level.
The lira hit a series of record lows in November, touching 8.58 before rallying on Ankara’s promises of a new economic model. It has since hovered around 7.8-7.9 to the dollar.
The depreciation of the currency, now at around 25% since the beginning of the year, leads to an increase in prices through imports in hard currencies and is one of the major factors affecting inflation.
The median forecast of 12 economists for inflation at year-end was 12.55%. Forecasts ranged between 12% and 13.30%.
The central bank, which repeated in recent weeks that its main target is price stability, said last week that the inflation outlook had been hurt by the rapid expansion in loans.
The Turkish Statistical Institute is scheduled to announce November inflation data at 0700 GMT on Dec. 3.