Have surging oil prices stoked Turkish inflation even further?

Have surging oil prices stoked Turkish inflation even further?

Did Turkish inflation hit a 20-year high in March?

Surging global energy prices probably propelled Turkish inflation to its fastest rate in two decades in March, but President Recep Tayyip Erdogan’s fixation on low interest rates means the central bank remains loath to respond with tighter monetary policy.

The bank has slashed its benchmark rate by a cumulative 500 basis points since September after Erdogan, a self-described “enemy of interest”, ordered policymakers to lower borrowing rates to fuel economic growth ahead of a 2023 general election.

In the months since September’s rate cut, the lira has tumbled 40 per cent against the dollar, setting off an inflation spiral.

Economists polled by Reuters expect official data, due April 4, to show that consumer prices rose by an annual 61.6 per cent in March.

A sharp rise in commodity prices triggered by Russia’s invasion of Ukraine has only made the pain worse. The state energy importer Botas on Friday raised natural gas prices for households by 35 per cent and for companies by 50 per cent. Turkey imports almost all of the oil and natural gas it consumes.

Despite signs that inflation will accelerate further, the central bank has indicated it believes price increases will slow once the