LONDON (FT) - Turkish inflation accelerated for the sixth month in a row in March as the weak lira drove up the cost of imports, making it harder for the country’s new central bank governor to fulfill President Recep Tayyip Erdogan’s wish to ease monetary policy.
Consumer prices rose 16.19 per cent year on year, in line with the expectations of economists polled by Reuters.
The month-on-month increase was 1.08 per cent, with transportation and white goods leading the rise, the state statistics agency said on Monday.
Turkey’s inflation rate has been stuck in double digits for much of the past three years, leaving central bank governor Sahap Kavcioglu with a dilemma. Kavcioglu was appointed last month by Erdogan, who has often demanded lower borrowing costs to spur economic growth. But cutting rates risks fuelling inflation and threatens to undermine the value of the lira, according to analysts.
"The renewed depreciation pressure on the local currency highlights the need for the central bank to maintain a tight monetary policy,” Enver Erkan, an economist at Tera Securities, wrote in a research note after the inflation data were released.