Turkey’s inflation rate surges again

ISTANBUL: The inflation rate in Turkey jumped in May, official statistics showed yesterday, increasing pressure on the central bank to again raise interest rates as fears persist over the strength of the economy.Three weeks ahead of snap presidential and parliamentary elections on June 24, which would give President Recep Tayyip Erdogan beefed up powers, consumer prices climbed 12.15 percent from the same period in May last year, according to the Turkish statistics office.

The figure was up sharply on the 10.85 percent reading in April. Investors have raised concerns that the government is not doing enough to fight inflation amid signs the economy is overheating, with the lira down almost 20 percent for the year to date. The central bank last month sought to prop up the currency with an emergency 300 basis points rate hike and also by simplifying its monetary policy. The currency slightly gained 0.7 percent in value against the dollar to trade at 4.6 against the greenback.

Deputy Prime Minister Mehmet Simsek sought to play down the rise, saying that “to a large extent” it reflected base effects as well as oil price and currency movements. He vowed monetary and fiscal policies would be increasingly coordinated, and that would help inflation trend downwards in the second half of the year. “With the postelection structural reforms and macro precautionary measures, our set of policy instruments will become stronger,” he said. —Agencies