Turkish inflation accelerated for a sixth month in November to the highest level in three years, driven by a slump in the lira that continues to cloud the consumer price outlook.
Annual inflation climbed to 21.31 per cent through last month, up from 19.89 per cent in October. That was faster than the 20.7 per cent median estimate in a Bloomberg survey of 20 analysts. Monthly inflation was 3.51 per cent, compared with the median estimate of 3 per cent in a separate survey.
The lira fell as much as 1.4 per cent after the release, nearing a record low of 13.9519 per US dollar seen earlier this week.
[The] lira sell-off only began in mid-November. December’s inflation print will be materially worse
Ehsan Khoman,
head of emerging market research for Europe, Middle East and Africa, MUFG Bank
The “lira sell-off only began in mid-November and thus did not completely show through in” Friday’s data, said Ehsan Khoman, head of emerging market research for Europe, Middle East and Africa at MUFG Bank in Dubai. “December’s inflation print will be materially worse.”
It is the first high-profile data point showing that President Recep Tayyip Erdogan’s plan to stabilise prices by lowering interest rates and letting the lira sink is backfiring.
In Mr Erdogan's eyes, the lira’s weakness is the cost of turning Turkey into an industrial powerhouse and freeing the country from a dependence on short-term foreign cash, which flows into the economy when rates are high.
But the currency’s 29 per cent drop during November – the biggest monthly slump since Turkey adopted a floating exchange regime two decades ago – is fuelling prices and unease among voters, producing the exact opposite of what Mr Erdogan is trying to achieve.
The lira dropped as much as 1.3 per cent to 13.8627 per dollar as of 12.48pm in Istanbul, nearing the record low it recorded last week.
Energy prices rose an annual 32.14 per cent in November from 25.76 per cent the previous month, although Turkey continues to subsidise natural gas and oil products to reduce the financial burden of increasing costs on end users.
A global commodity boom also contributed to producer prices, where inflation reached 54.6 per cent, the highest reading since April 2002, according to data compiled by Bloomberg.
Annual price gains in food, which makes up about a quarter of the consumer basket, slowed to 27.11 per cent from 27.41 per cent, but is still well above the end-2021 official estimate of 23.4 per cent.
The acceleration takes Turkey’s benchmark interest rate adjusted for inflation to negative 6.3 per cent, one of the lowest real yields among emerging markets.
Fitch Ratings cited the direction of monetary policy and a lack of consistent forward guidance as it downgraded the outlook on Turkey’s credit rating from stable to negative.
The central bank’s “premature” easing cycle and the prospect of further monetary and fiscal stimulus ahead of the general elections scheduled for 2023 “create risks to macroeconomic and financial stability and could potentially re-ignite external financing pressures”, Fitch said on Thursday.
SPECS
Toyota land Cruiser 2020 5.7L VXR
Engine: 5.7-litre V8
Transmission: eight-speed automatic
Power: 362hp
Torque: 530Nm
Price: Dh329,000 (base model 4.0L EXR Dh215,900)
Killing of Qassem Suleimani
Places to go for free coffee
- Cherish Cafe Dubai, Dubai Investment Park, are giving away free coffees all day.
- La Terrace, Four Points by Sheraton Bur Dubai, are serving their first 50 guests one coffee and four bite-sized cakes
- Wild & The Moon will be giving away a free espresso with every purchase on International Coffee Day
- Orange Wheels welcome parents are to sit, relax and enjoy goodies at ‘Café O’ along with a free coffee
Match info
Uefa Champions League Group B
Barcelona v Tottenham Hotspur, midnight
The currency conundrum
Russ Mould, investment director at online trading platform AJ Bell, says almost every major currency has challenges right now. “The US has a huge budget deficit, the euro faces political friction and poor growth, sterling is bogged down by Brexit, China’s renminbi is hit by debt fears while slowing Chinese growth is hurting commodity exporters like Australia and Canada.”
Most countries now actively want a weak currency to make their exports more competitive. “China seems happy to let the renminbi drift lower, the Swiss are still running quantitative easing at full tilt and central bankers everywhere are actively talking down their currencies or offering only limited support," says Mr Mould.
This is a race to the bottom, and everybody wants to be a winner.
Why are you, you?
Why are you, you?
From this question, a new beginning.
From this question, a new destiny.
For you are a world, and a meeting of worlds.
Our dream is to unite that which has been
separated by history.
To return the many to the one.
A great story unites us all,
beyond colour and creed and gender.
The lightning flash of art
And the music of the heart.
We reflect all cultures, all ways.
We are a twenty first century wonder.
Universal ideals, visions of art and truth.
Now is the turning point of cultures and hopes.
Come with questions, leave with visions.
We are the link between the past and the future.
Here, through art, new possibilities are born. And
new answers are given wings.
Why are you, you?
Because we are mirrors of each other.
Because together we create new worlds.
Together we are more powerful than we know.
We connect, we inspire, we multiply illuminations
with the unique light of art.
Ben Okri,
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The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
Normcore explained
Something of a fashion anomaly, normcore is essentially a celebration of the unremarkable. The term was first popularised by an article in New York magazine in 2014 and has been dubbed “ugly”, “bland’ and "anti-style" by fashion writers. It’s hallmarks are comfort, a lack of pretentiousness and neutrality – it is a trend for those who would rather not stand out from the crowd. For the most part, the style is unisex, favouring loose silhouettes, thrift-shop threads, baseball caps and boyish trainers. It is important to note that normcore is not synonymous with cheapness or low quality; there are high-fashion brands, including Parisian label Vetements, that specialise in this style. Embraced by fashion-forward street-style stars around the globe, it’s uptake in the UAE has been relatively slow.
The specs
AT4 Ultimate, as tested
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MATCH INFO
Real Madrid 2 (Benzema 13', Kroos 28')
Barcelona 1 (Mingueza 60')
Red card: Casemiro (Real Madrid)
