By Joshua Kirby
Turkish inflation continued to rise last month ahead of local elections in which President Tayyip Erdogan's party suffered a serious blow.
The country's consumer-price index, a measure of rises in domestic prices, increased by 68.50% compared with March last year, accelerating from a 67.07% annual rate in February, according to figures published Wednesday by statistics agency Turkstat. Core prices, stripping out the more volatile effects of energy, food, tobacco and gold, accelerated even faster.
It marks a fifth straight month of increased inflation that has left the Turkish lira foundering, pushed more Turks into poverty and forced the central bank to lift borrowing rates to new heights.
Anger at Turkey's sky-high inflation and economic turmoil helped the country's main opposition to victory in nationwide local elections held at the weekend. The opposition retained the mayoralty of powerhouse city Istanbul and came out on top in other local bouts against Erdogan's Justice and Development party, or AKP.
March's increase in inflation was nonetheless widely expected by economists, according to a poll conducted by FactSet ahead of the release. An increase in the country's minimum wage was expected to add fuel to services prices, the main driver of Turkey's runaway inflation. Prices for educational services, for example, more than doubled on year in March, while hospitality and health services also continued to see rapid increases.
The setback for the ruling AKP comes as good news for investors, said Liam Peach, senior emerging markets economist at Capital Economics. Policymakers will be even more keen to redress the lopsided economy in order to appease angry voters, he said in a note.
"We still expect another interest rate hike this month," Peach said. "Further fiscal tightening will be needed to help lower inflation."
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
(END) Dow Jones Newswires
04-03-24 0335ET
