2023-09-05 13:16:20
JPMorgan revised its year-end inflation forecast for Turkey up to 65 percent from 62 percent, looking at annual inflation data for August released by the Turkish Statistical Institute.
And the American bank expected that the annual rate of inflation in Turkey would reach a peak of 73 percent in May 2024. The bank pointed to risks threatening to raise its expectations for the interest rate in Turkey for the entire current year, which it keeps at 35 percent, while it expected it to rise by the end of the year. Next year to 45 percent instead of estimates at 40 percent.
Data from the Turkish Statistical Institute showed, on Monday, that annual consumer price inflation in Turkey rose to 58.94 percent in August, exceeding expectations and recording a rise for the second month in a row. Consumer price inflation rose in August at 9.09 percent month-on-month, down slightly from a rise of 9.49 percent in July, when annual inflation was 47.8 percent.
Turkey’s central bank raised the interest rate in August by 750 basis points from 17.5 to 25 percent.
Fatih Ak Celik, of JPMorgan Bank, said in a note to clients that the reported figures for consumer price inflation in Turkey for August indicate a long-term deinflationary process. He added, “Since we expect inflation to continue, we expect further monetary tightening to address inflationary pressures, following the local elections in March 2024.”
The Central Bank of Turkey said, in a statement, on Tuesday, that included an assessment of inflation data in August, that annual inflation rose in all major groups as a result of the effects of taxes and managed price adjustments in August inflation, as well as the depreciation of the Turkish lira and the late effects of wage increases and monetary policy, and the rise in prices. global energy.
The Turkish Central Bank added that while it was noted that the highest monthly increase was in the energy group by 14.23 percent, it was emphasized that this development was driven by external price pressures, in addition to the tax impact from the previous month.
Noting that the increases in fuel prices were quickly reflected in the prices of transportation services, the Turkish Central Bank stated that 27.62 percent was recorded in the monthly inflation, which is the highest increase calculated in the range of the consumer price index on the basis of 2003.
He added that foodstuffs, minimum wages, services, and developments in exchange rates and rents also had an impact on the rise in inflation, explaining that the rise in commodity prices continued in conjunction with the delayed effects of the depreciation of the Turkish lira.
The Turkish Central Bank pointed out that the negative expectations for the prices of fresh fruits and vegetables continued in August, and that the price increases in the sub-group of processed foods spread and strengthened as well.
With regard to producer prices and basic indices, he explained that the upward trend in producer prices continued, and became more evident in the energy group, and the upward pressures led by producers on consumer prices became clear in the past three months.
The Turkish Central Bank indicated that the rates of monthly increase in inflation indicators with seasonally adjusted data maintained their strong path, and annual inflation indicators continued to rise.
At the same time, Turkey’s Banking Regulation and Supervision Authority decided to lift credit restrictions on companies that corrected irregularities related to missing documents or independent audit statements.
The authority said, in a statement, on Tuesday, that this measure aims to enhance financial stability and use resources in more efficient and productive areas, to enable the credit system to work effectively, and it was also implemented as a total precautionary measure necessary to ensure that loans are used in a targeted manner.
She added that with the newly taken decisions, the equivalent of Turkish lira in foreign currency monetary assets of companies that are currently subject to independent audit should be more than 10 million liras, and the higher percentage of the total assets of these companies in foreign currency.
It was also decided not to provide a new cash commercial loan in Turkish lira to these companies, if the loan percentage exceeds 5 percent of their revenues.
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