ANKARA
Turkey’s year-end inflation at double digits is unlikely, according to Turkey’s Deputy Prime Minister Ali Babacan, although he admits the figure may come above the government target of 7 percent.
Speaking in a private TV interview on Tuesday, Babacan said that the higher than estimated inflation figures are not related to the tight monetary policy implemented by the Central Bank of Turkey, but rather he blamed high food prices due to the country's severe drought in the recent past.
“When interest rates were increased, people usually prefer saving rather than spending. Consequently, when spending and private demand decreased, prices do not increase. We believe the high inflation figures are largely related to food prices,” Babacan said.
Babacan admitted the year-end inflation figure may come above the government target of 7 percent. He said that when this target was announced by the Central Bank, food price inflation estimates were at 9 percent and this estimate has been surpassed recently.
“Inflation will be slightly above targets, but we do not give even a one percent chance for double-digit inflation figures,” he said.
Interest rates have been a matter of much debate in Turkey for some time since the Central Bank of Turkey insisted on maintaining high interest rates until clear signs of an improvement in the inflation outlook materialized while government officials blamed the bank’s high interest rates policy for higher than expected inflation figures.
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