Turkish inflation ends year at 64.8%, seen rising further

ISTANBUL, Jan 3 (Reuters) – Turkey’s annual inflation rate climbed to 64.77% in December, official data showed on Wednesday, sustaining an upward trend that is expected to continue in coming months after a big rise in the minimum wage.

Month-on-month, consumer price inflation (CPI) was 2.93%, according to the Turkish Statistical Institute, dipping from 3.28% in November. The measure has eased in recent months as sharp monetary tightening has begun to weigh.

A Reuters poll had shown that annual inflation was expected to rise to 65.1% in December, with monthly inflation seen at 3.1%. In November, annual inflation was 61.98%.

The biggest sectoral price rise in 2023 was shown by hotels and restaurants, up 93.2%, followed by education at 82.1%. Key food and non-alcoholic drinks prices rose 72.0% during the year.

After years of easy policy, the central bank pivoted in June and has since raised its key interest rate by 3,400 basis points to 42.5% to rein in inflation.

But at the end of last year, the government announced a larger-than-expected minimum wage hike of 49% for 2024. It affects some 7 million workers and is expected to push inflation higher in the coming months, according to economists.

Inflation surged following a currency crisis at the end of 2021 and hit a 24-year peak of 85.51% in October 2022. Last year, the lira weakened some 37% against the dollar.

The domestic producer price index was up 1.14% month-on-month in December for an annual rise of 44.22%, the data showed.