The annual inflation edged higher to 14.6% in December and food prices soared more than 20% just as new coronavirus-related curbs and higher borrowing costs appeared, Trend reports citing Daily Sabah.
Presenting the first inflation report of the year, Central Bank of the Republic of Turkey (CBRT) Governor Naci Agbal warned that rises in food prices were an important risk to overall inflation in 2021.
Having repeatedly said it would take a stronger approach to tackling inflation under the new governor Ağbal, the central bank has raised its policy rate by 675 basis points to 17% since November.
Ağbal reaffirmed the bank's commitment to upholding tight monetary policy even if more “front-loaded” steps are needed. He also stood by a forecast that inflation would fall to 9.4% this year.
He said the bank would keep policy tight until inflation comes down to the 5% target, which he said would not happen until 2023.
In November Erdogan had said that “bitter medicine” like high rates were needed to cool prices.
Lütfi Elvan, the new treasury and finance minister, said he would take structural steps to fight inflation.
Ağbal’s presentation strengthened the message that the central bank has no intention to cut rates prematurely, said Piotr Matys, senior emerging markets forex strategist at Rabobank.
He added that a structural solution needs to be found to stabilize food prices, which have been the main driver behind the rise in inflation in recent months.
The president this week instructed officials to investigate increases in food prices, saying that the Turkish people should not be expected to endure high inflation and high interest rates.
Amid complaints over rising costs, Turkish regulators this week launched nationwide price audits, handing around TL 3.6 million ($492,000) in fines to 120 firms.
Some firms faced price-related fines ranging from TL 10,000 to TL 100,000, while others were handed fines between TL 50,000 and TL 500,000 for stockpiling goods.
To date, some 495 firms that have been found to have been charging exorbitant prices for basic goods and food have been fined TL 15.48 million by the Unfair Price Assessment Board, consisting of government officials and private sector representatives.
Erdogan said audits by the Trade Ministry would continue more intensively in the coming months.