A woman displays her utility bills during a protest against high energy prices in Istanbul, Turkey February 9, 2022.
A woman displays her utility bills during a protest against high energy prices in Istanbul, Turkey February 9, 2022. Reuters / UMIT BEKTAS

Turkey's annual consumer inflation leapt to a 20-year high of 61.14% in March, data showed on Monday, fuelled by rising energy and commodity prices as the fallout of the Russia-Ukraine conflict compounds the impact of the lira's plunge last year.

Inflation has surged since last autumn, when the lira slumped after the central bank (CBRT) launched a 500 basis-point easing cycle sought by President Tayyip Erdogan.

Month-on-month consumer prices rose 5.46%, the Statistical Institute said, just below a Reuters poll forecast of 5.7%. The annual consumer price inflation forecast was 61.5%.

"CBRT policies are just not working in countering inflation," said Tim Ash at BlueBay Asset Management. "Indeed, I think the overwhelming consensus is that the unorthodox policy settings of the CBRT are a major cause of inflation.

"The war in Ukraine is just making things that much worse," Ash added, nothing the bank had not hit its annual inflation target of 5% since 2011.

The data had little impact on the lira, which weakened 0.15% to 14.715 against the dollar. The local currency tumbled 44% in 2021 and another 10% this year.


The government has said inflation will fall to single digits next year under its new economic programme - prioritising low interest rates to boost production and exports - aimed a achieving a current account surplus.

However, data on Monday showed the trade deficit widened 77% year-on-year in March to $8.24 billion, with a 156% increase in the value of energy imports, threatening to derail the current account goal.

Haluk Burumcekci, founder of Burumcekci Consulting, said inflation could peak at 70%-75% even if the lira does not weaken from its current level, only falling with the base effect in the last months of the year.

"It will not at all be easy for the CBRT to maintain its loose monetary policy stance," he said.

Consumer price inflation was driven by transportation, including petrol prices, and education prices, which rose 13.29% and 6.55% respectively. Rising energy prices have drawn public protests in recent months.

Annually, transportation prices rose 99.12% and food and non-alcoholic drink prices were up 70.33%.

Economists marked up inflation expectations globally following Russia's invasion of Ukraine, with energy prices hitting multi-year highs as the West sanctioned Moscow. Turkey imports almost all of its energy needs.

The Reuters poll forecast year-end inflation of 52.2%, up from 38% in last month's poll.

Producer prices climbed 9.19% in March, or 114.97% annually.