ECONOMY

Turkish inflation rises a higher-than-expected 3.1 percent in March

ANKARA – Turkish consumer price inflation (CPI) rose a monthly 3.1 percent in March for an annual rate of 29.4 percent, higher than market expectations, official data showed yesterday. Turkey aims to cut CPI to 20 percent by the end of the year under a $16 billion IMF lending deal. The target for wholesale inflation (WPI) is 17.4 percent. The State Statistics Institute said WPI rose a monthly 3.2 percent in March, also above predictions, to reach 35.2 percent year-on-year, compared to 33.4 percent in February. A Reuters poll of 23 bankers and economists last week forecast CPI as rising 2.3 percent in March and WPI, 2.6 percent. Turkish analysts said the higher-than-expected price rises were partly due to increasing farm prices after a cold winter and to a fall in the value of the lira currency in March. «WPI was higher than expectations, but I don’t think that will be (market) negative because it was above forecasts due to farm prices. Our estimate for the year-end is 27 percent for WPI, 26 percent for CPI,» said Baturalp Candemir, economist at HC Istanbul. Many analysts took comfort in the fact that core inflation, defined as private sector manufacturing prices, rose only 1.6 percent. That was lower than expectations of 2 percent. «This is not as scary as it looks because the source is agriculture. When we look at core inflation, we see that was limited. That is crucial for the future trend,» said Banu Kivci Tokali, an economist for Dis Investment. But the headline rises, which follow surprisingly high data for February, suggest the ruling Justice and Development Party will have to work hard to meet the IMF inflation targets. Turkey exceeded the inflation targets in 2002. «It is quite clear that the government will be unable to meet its own target and the government will need to make some revisions at some stage,» said Mehmet Simsek, emerging markets economist at Merrill Lynch in London.