Consumer prices rose 1.19% m/m in March, driven by food prices, beating the market consensus forecast of 0.89%. This was also above the CPI inflation of 0.71% m/m recorded in February.

As a result, the annual CPI inflation rate quickened to 7.61% in March from 7.55% in the previous month.

Food prices increased by 2.47% m/m (14.12% y/y food inflation) adding 0.61 percentage points to the headline inflation while clothing prices rose by 1.06% m/m, adding another 0.08 percentage points, data of the statistics institute TUIK showed on April 3. Communication prices fell 0.03% m/m, transportation costs were up 0.91% m/m, and housing prices registered a 0.72% m/m increase.

The core inflation, measured by the I-index, rose 0.61% m/m after falling 0.14% in February. The annual increase in the I-index was 7.1% in March.

TUIK also said that domestic producer prices rose 1.05% m/m in March after registering a 1.20% m/m increase in February, bringing the annual producer price inflation to 3.41% from 3.1%.

The central bank has been warning about elevated food prices for some time, saying food prices along with uncertainty in global markets necessitate maintaining the cautious stance in monetary policy. The unpromising outlook for inflation leaves little room for the central bank to cut interest rates to stimulate the flagging economic growth. The Turkish economy grew by 2.6% y/y in Q4/2014, above the 1.9% y/y expansion in the previous quarter. But Turkey’s GDP growth slowed to 2.9% last year from 4.2% in 2013. The government, apparently acknowledging the bleak prospects for economic growth this year, this week announced a TRY7.5bn (€2.7bn) economic package to boost the economy through several measures spanning from insurance premium support to employers to certain tax reliefs, ahead of the June elections.