The governor of the Turkish central bank on Tuesday said he expects pricing behavior to return to normal as the effects of the coronavirus pandemic ease, adding that the bank will continue to take necessary policy steps to support normalization, Trend reports citing Daily Sabah.
Speaking at the Future of Finance Summit, organized by the Daily Sabah’s parent company Turkuvaz and its broadcaster A Para, Shahap Kavcioghlu said global food prices have displayed sharp rises and that continued drought and production conditions were impacting prices negatively.
Turkey is among the countries with the highest surge in food prices, which Kavcioghlu said would decline with normalization of demand composition, easing of supply restrictions and decoupling of base effects.
“These elements will also have a downward effect on inflation in our country in the coming period,” the governor added.
Turkey’s annual consumer price inflation accelerated to 19.25% in August, above the Central Bank of the Republic of Turkey’s (CBRT) policy rate and its highest level in more than two years.
Food inflation soared nearly 30% in August from last year and more than 3% from the previous month.
On the other hand, the producer price index rose 2.77% month-on-month for an annual rise of 45.52%.
Kavcioghlu said the gap between consumer and producer inflation was not specific to Turkey alone, stressing it recently increased significantly above the long-term average in many developed and developing countries.
The governor attributed to some extent the recent soaring prices of certain goods to the pandemic as well as an increase in commodity prices and disruptions in supply chains. Yet, he said, “we are seeing higher price increases especially in sectors that have been negatively affected by the pandemic and where demand has been buoyant.”
“However, we assess that these emerging pricing behaviors will converge to their pre-pandemic state again in the coming period as economic and social normalization gains momentum,” he noted.