Turkey’s May inflation jumps

ANKARA (Reuters) – Turkey’s consumer price index (CPI) jumped 1.88 percent month-on-month in May for an annual rise of 9.86 percent, the Turkey Statistics Institute (TUIK) said yesterday, well above market expectations. The producer price index (PPI) in May was up 2.77 percent month-on-month and 7.66 percent year-on-year. According to the median forecast in a Reuters poll of 26 economists, the CPI was predicted to be up 0.83 percent on the month and PPI was expected to be 1.39 percent higher. Economists had expected inflation to speed up in May after higher-than-expected April price data triggered a sharp fall in the value of the lira currency. The Turkish central bank had also said higher fuel and gold prices would push up May inflation by 0.4 percentage points. «One can safely say that this suggests that the strong April figure was not just a blip as we had expected,» analysts 4cast said. «This makes meeting the central bank target of 2006 of 5.0 percent even more unlikely, especially given that the recent slide in the Turkish lira will not impact CPI until August.» The lira dropped to around 1.555 to the dollar in Monday-dated trade shortly after yesterday’s announcement, against 1.528 immediately before the news came out. Yields on the benchmark bond jumped to 17.25 percent on the news, a fresh high for 2006. Yesterday’s data showed industrial manufacturing prices in May rose by 3.0 percent and farm prices by 2.72 percent.

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