Turkish inflation accelerated in April for the fifth month in six, a pickup the central bank says will fade by the end of the year.
The annual inflation rate rose to a 17-month high of 10.2 percent from 9.6 percent the previous month, the statistics office in Ankara said on its website today. The increase was less than the median estimate of 10.5 percent in a Bloomberg survey of 12 economists. In the month, prices rose 0.6 percent.
Central bank Governor Durmus Yilmaz said last week that Turkey is likely to miss its year-end inflation target of 6.5 percent, forecasting a rate of 8.4 percent and attributing the deviation to higher grocery prices and faster-than-expected growth. He also said the bank may start lifting the benchmark rate from a historic low of 6.5 percent in the fourth quarter.
April inflation is “slightly better than expected and it looks as if price cuts in the telecoms industry helped reduce the figure,” said Haluk Burumcekci, chief economist for Fortis Bank AS, an Istanbul-based bank with about $8 billion of assets. “Still, core inflation is rising again.”
The measure of core inflation the bank monitors, which excludes food and energy prices, accelerated to 5.7 percent from 5.4 percent. Communications prices fell 4.8 percent in the month, while clothing and shoes jumped 10.6 percent, and grocery prices rose 0.1 percent.
Bond Yields Rise
Yields on two-year Turkish lira bonds rose two basis points, or 0.02 percentage points, to 9.27 percent after the inflation figures were announced. The lira was 0.4 percent stronger at 1.4935 per dollar at 10:25 a.m. in Istanbul.
Turkey’s central bank in December called a halt to a series of rate cuts that had reduced the benchmark by 10.25 percentage points since November 2008. The bank has kept it at 6.5 percent since then.
The rate cuts helped the economy return to growth on an annual basis in the last quarter of 2009, when it expanded 6 percent after four quarters of contraction. Gross domestic product probably grew more than 10 percent in the first quarter, Yilmaz said on April 29.
Sales of cars and vans in the first four months of this year have almost returned to the level in the same period of 2008, before the global financial crisis struck, Hurriyet newspaper reported today, citing unidentified industry officials. Net income at Ford Otomotiv Sanayi AS, the Turkish unit of Ford Motor Co., more than doubled from a year earlier to 71.1 million liras ($48 million) in the first quarter.
Ready to Raise
Yilmaz said April 29 that the bank is ready to raise rates if “increases in inflation expectations lead to a deterioration in price-setting.”
The expectation for inflation in 12 months was 7.22 percent in the central bank’s latest survey of economists and executives, released on April 22. Two weeks earlier it was 7.25 percent.
The cost of goods leaving Turkish factories and mines rose an annual 10.4 percent in April, compared with a rise of 8.6 percent the previous month, the statistics agency said today. Producer prices rose 2.35 percent in the month.
To contact the reporter on this story: Steve Bryant in Ankara at email@example.com.