Turkey's inflation rate edged up to almost 11 percent in April, official statistics showed Thursday, adding to fears that the economy is overheating less than two months ahead of elections.
Consumer prices rose 10.85 percent in April from the same month the year earlier, the Turkish Statistical Institute announced. The reading was higher than forecast and up on the 10.23 percent recorded in March.
It said the largest annual increase in the month was in furnishing and household appliances -- up 16.75 percent, and in transportation prices, up 16.45 percent.
The latest inflation figure -- double the central bank's official target of 5 percent -- comes after the central bank on April 25 hiked one of its main interest rates to combat rising prices and a weakening currency.
Markets digested the news uneasily, with the lira touching 4.19 to the dollar, a decline of 0.49 percent in value on the day, and 5.04 against the euro, a loss of 0.98 percent on the day.
"Today's stronger-than-expected Turkish inflation data will add to fears that the economy is overheating," UK-based Capital Economics said in a note to clients, adding the figures strengthened the case for further interest rate hikes.
Ratings agency S&P on Tuesday cut Turkey's foreign currency debt ratings to a speculative 'BB-/B' for long- and short-term issues respectively, citing "a risk of a hard landing for Turkey's overheating, credit-fueled economy."
Turkish Prime Minister Binali Yildirim on Thursday lashed out at the ratings move, describing it was unwarranted and a bid to damage the ruling party in June 24 elections.
"You look at the reasoning and it's rubbish," he told a party meeting in parliament. "It does not correspond with Turkey's reality."
"It is completely political, a scenario set up" to harm the ruling party in the campaign, he added. "For us, the rating that matters is the note from the people."
"Those who tried to be successful with terror, now try to be successful with economic terror. They should know they will absolutely not be succeed."
President Recep Tayyip Erdogan has announced snap presidential and parliamentary elections on June 24 instead of November 3, 2019 to fully legalise a new executive presidency boosting the powers of head of state.
A potentially worsening economic climate is seen as one of the reasons behind Erdogan's abrupt move although this has been rejected by government officials.