Turkey’s annual inflation held steady in January at nearly 65%, but monthly consumer price increases rose sharply after a huge increase in the minimum wage, official data showed on Monday.
The annual inflation rate moved to 64.86 percent — up from 64.77 percent in December, the TUIK statistics agency said.
Monthly inflation in January, however, rose to 6.7%, up from 2.9% in December, following a 49% increase in the minimum wage that took effect in January.
Turkey’s Finance Minister Mehmet Simsek attributed the monthly jump in inflation to “temporary effects”.
“We forecast that, starting in February, monthly inflation will decline significantly and remain in line with our forecasts,” Simsek said on social media.
“We will see a significant reduction in annual inflation in the second half of the year.”
The US labor market defied expectations for a January slowdown
Inflation remains a pressing issue for President Recep Tayyip Erdogan’s government ahead of local elections in March.
The ruling AKP party is trying to regain control of major cities, including Istanbul and the capital Ankara, currently held by the main opposition party.
Turkey’s central bank, which raised its key interest rate from 8.5 percent to 45 percent from June, said last month that the level was sufficient to begin easing the cost-of-living crisis.
Bank governor Hafize Gaye Erkan resigned on Friday, less than a year into her tenure, following a scandal involving her family.
He was replaced by Fatih Karahan, a former economist at the Federal Reserve Bank of New York and US online retail giant Amazon, who may be under pressure to start raising interest rates again, analysts said.
“The case for restarting the tightening cycle with another rate hike later this month is compelling and will underline the central bank’s commitment to tackling inflation – and help build Governor Karaham’s credibility,” the Capital analyst said Economics Liam Peach.
Source: AFP