Turkey inflation higher than expected at 57%

Turkish annual inflation dipped to 57.68% in January, official data showed on Friday, but was well above forecasts despite a favourable base effect that is expected to carry on until President Tayyip Erdogan seeks re-election in May.

Month-on-month, consumer prices rose 6.65%, the Turkish Statistical Institute said, nearly twice a Reuters poll forecast of 3.8%. Annually, consumer price inflation was forecast to be 53.5%.

The sharp monthly rise was due to a raft of new-year price hikes including for public transit, tobacco products and services, as well as rising food prices.

Inflation hit a 24-year high of 85.51% in October, stoked by a series of unorthodox interest rate cuts, that began in September 2021 and caused a currency crash late that year.

The annual price measure is now easing relative to that run-up, which included an 11% surge from December 2021 to January 2022.

Economists expect annual inflation to dip to around 40% by the time of the May elections, which are expected to be tight according to polls.

The domestic producer price index was up 4.15% month-on-month in January for an annual rise of 86.46%, the data also showed.