* Lira slides some 10 percent against dollar this year
* Snap elections to be held on June 24
* Pressure on central bank to rein in inflation (Adds analyst comment, details, graphics, background)
ISTANBUL, May 3 (Reuters) - Turkish consumer price inflation jumped more than expected in April to nearly 11 percent year-on-year, data showed on Thursday, sending the lira currency to a record low on concerns about the central bank’s failure to stem price rises.
Double-digit inflation and the fall in the lira, which has weakened around 10 percent against the dollar this year, is a growing worry for the government as it prepares for snap parliamentary and presidential elections on June 24.
The consumer price index climbed 1.87 percent month-on-month, the Turkish Statistical Institute said, above a Reuters poll forecast of 1.6 percent, for a rise of 10.85 percent year-on-year. Core “C” CPI inflation was 12.24 percent year-on-year.
Investors’ sentiment has also been hit by Standard & Poor’s cut in Turkey’s sovereign rating, a survey showing manufacturing activity contracted for the first month in 14 and the unveiling of a $6 billion government incentive package.
The S&P move and incentives package “reignited market concerns about the overheated economy at a time when inflation is rising”, said Piotr Matys, a London-based Rabobank strategist. “We had yet another higher-than-expected inflation report, so the lira is under renewed selling pressure.”
The lira, one of the worst performing emerging market currencies this year, weakened to a record low of 4.2487 against the dollar, from Wednesday’s close of 4.1785. It was at 4.2005 at 0705 GMT.
The main share index dipped 0.15 percent and the yield on the benchmark 10-year bond rose to 13.25 percent from 12.93 percent on Wednesday.
Clothing and shoe costs helped to drive the rise in consumer prices, increasing 10.4 percent on the month, although those in the food and non-alcoholic drinks sector dipped 0.21 percent.
The data heightened concerns about the central bank’s ability to rein in an economy that investors say is overheating.
Last week, the bank raised its top interest rate by a more-than-expected 75 basis points but analysts said it would need to do more to fight inflation and support the currency. Its next policy-setting meeting is on June 7.
Matys said the central bank may have to consider an emergency policy meeting beforehand, as was the case in January 2014. “The next few weeks will be crucial and I don’t think the central bank will be able to wait until June 7 to deliver another dose of tightening,” he added.
The bank lifted its end-2018 inflation forecast to 8.4 percent on Monday when it announced its quarterly inflation report. Its inflation target stands at 5 percent.
The bank’ policy outlook has been clouded by politics. President Tayyip Erdogan, a self-described “enemy of interest rates”, has repeatedly called for lower borrowing costs to boost the economy.
Producer prices rose 2.60 percent month-on-month in April for an annual rise of 16.37 percent.
Writing by Daren Butler Editing by Dominic Evans, David Dolan and David Stamp
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