Turkish Inflation Surges to 20-Year Highs as Energy, Food Costs Bite

LOCAL NEWS

• Turkey’s inflation jumped to a fresh 20-year high in February, driven by a weak lira and a surge in energy and food prices. CPI rose to 54.4% y/y through last month, up from 48.7% in January, while PPI rose to 105%. Energy inflation stood at 83% from 76.4% in January, led by gasoline and power costs.
  • Turkey has recently cut taxes on household power consumption, but the impact will only be seen from March. Annual price gains in food, which makes up roughly a quarter of the consumer basket, accelerated to 64.5% from 55.6%, even after the government cut taxes on food – bbg
• Ukraine pressures on the rise in Turkey: Price increases in wheat have accelerated amid Russia-Ukraine conflict – rising by $100/ton. Only those with products in warehouses in Turkey submitted bids for the Turkish Grain Board tender yesterday.
  • With the slowdown in exports, vegetable prices also fell in Antalya wholesale markets and early bookings in tourism were cut off. Russia and Ukraine are key sources of tourism for the region. - Dunya
• 69% of Turks says they hold the AKP accountable for the rise in electricity prices. This has affected their confidence with 26.6% saying their approval was reduced, while 46.1% said they have no confidence left in govt at all. 3.7% blamed electricity companies & 2.1% blamed privatisation. This prompted govt to reduce VAT on electricity by 10% from 18% to 8% - Duvar
• Russia says it will respect Turkey’s request to not allow passage of warships via the Black Sea under the Montreaux doctrine – cancelling a bid to send four additional ships via the Bosphorus. The US expressed appreciation for Turkey’s move to close the straits.