Turkey’s annual inflation rate in April hit 11.87%, following the 11.29% seen in March, official data showed on May 3. The new figure is the highest recorded since October 2008 when the CPI was at 11.99%.

Consumer prices in April rose 1.31% month on month, the Turkish Statistics Institute (TUIK) added. 

The annual inflation figure met the expectations expressed in a Reuters poll of economists’ forecast. And some experts believe the rate may have peaked.

“The further rise in Turkish inflation in April probably marks the peak for the headline rate, and it should slowly reverse course in the coming months”, William Jackson of Capital Economics said on May 3 in an e-mailed note.

Jackson thinks “the central bank will not follow up the latest Monetary Policy Committee (MPC) meeting’s surprise interest rate hike with another one at the next meeting scheduled in June”.

At the latest MPC meeting held on April 26, the central bank kept its one-week repo (8%), overnight lending (9.25%) and borrowing (7.25%) rates on hold, but surprised the market by unexpectedly pushing up the late liquidity window rate by 50bp to 12.25%.

The lira fell by a limited 0.2% d/d to trade at 3.5281 per dollar as of 10:45 local time on May 3, following the release of the data.

Food prices were up 1.23% m/m, adding 0.26pp to headline inflation. Clothing prices increased 9.13% m/m in April, adding another 0.64pp.

Transport costs rose by 0.84% m/m in the month and they added another 0.13pp to the overall CPI inflation in April.

The C-index, one of the central bank’s favourite core inflation indicators, increased by 1.25% m/m in March, bringing the annual rise to 9.46%.

The outlook on the domestic producer price front was not any better. Prices in this area were up 0.76% m/m with annual inflation in domestic producer prices escalating further from 16.09% in March to 16.37% in April, the highest level since July 2008’s 18.41%.

Last week, the central bank revised its end-year inflation expectation for 2017 to 8.5% from its previous forecast of 8%.

The IMF predicts that Turkey’s CPI inflation will come in at 10.1% for this year but decline to 9.1% in 2018.

Turkey's CPI Inflation (y/y)
%	Weights-OLD	Dec-15	Oct-16	Nov	Dec	Weights-2017	Jan-17	Feb-17	Mar-17	Apr-17
Headline	100	8.81	7.16	7.00	8.53	100.00	9.22	10.13	11.29	11.87
Food and non-alcoholic beverages	23.68	10.87	5.20	3.55	5.65	21.77	7.77	8.72	12.53	15.63
Alcoholic beverages and tobacco	4.98	5.68	22.61	22.61	31.59	5.87	22.90	21.72	21.71	21.65
Clothing and footwear	7.43	8.99	6.07	4.59	3.98	7.33	3.66	6.77	8.52	5.17
Housing, utilities	15.93	6.71	5.53	5.87	6.42	14.85	6.54	7.42	7.71	7.53
Furnishings, household equipment	8.02	10.95	6.28	5.46	6.24	7.72	6.16	4.93	5.33	5.58
Health	2.66	7.16	9.39	9.16	9.73	2.63	12.13	12.53	13.28	13.32
Transportation	14.31	6.40	8.19	9.57	12.36	16.31	15.61	17.96	17.69	17.94
Communications	4.42	3.56	2.80	3.09	3.18	4.12	3.24	4.36	4.47	4.15
Recreation and culture	3.81	11.56	2.42	4.26	5.93	3.62	6.23	7.32	9.30	9.22
Education	2.56	6.39	9.58	9.50	9.47	2.69	9.43	9.33	9.84	9.64
Hotels, cafes and restaurants	7.47	13.23	8.34	8.50	8.62	8.05	8.58	8.66	8.71	9.27
Miscellaneous goods and services	4.73	11.00	9.34	10.92	11.08	5.04	12.74	12.82	12.51	13.68
Source: tuik