October 3, (THEWILL) – Turkey’s annual inflation reached a new 24-year high of 83.45 per cent in September, the Turkish Statistical Institute said in a report on Monday.
Month-on-month, consumer prices rose by 3.08 per cent, the Institute added.
It was the highest annual figure since July 1998, when it stood at 85.3 per cent and Turkey was battling to end a decade of chronically high inflation.
September inflation was driven by transport prices, which surged nearly 118 per cent year-on-year, while food and non-alcoholic drinks prices jumped 93.05 per cent.
After the data, the lira traded at 18.5620 against the dollar, weakening from a close of 18.5620 on Friday.
Last month, Turkey’s central bank delivered another interest rate cut, lowering the benchmark rate to 12 per cent, despite rising prices, a plunging lira and an unbalanced current account.
Economists say rising inflation in Turkey is fueled by President Recep Tayyip Erdogan’s unorthodox belief that high borrowing costs lead to higher prices.
The Government says it hopes to lower interest rates to boost production and exports in a bid to reach a current account surplus. Erdogan has said he expects inflation to fall in the new year.
The sharpest increases in annual prices were in the transportation sector, at 117.66 per cent, followed by food and non-alcoholic drinks prices at 93%, according to the statistical institute’s data.
The bank cut its policy rate again by 200 basis points to 12 per cent in the last two months, going against a global tightening cycle despite the sustained rise in inflation, surging energy prices and the lagged effect of the lira’s decline.
Last year’s rate cuts had triggered a currency crisis that wiped 44 per cent off the lira’s value against the dollar in 2021. It has weakened some 29 per cent this year to fresh all-time lows.
Inflation has surged since autumn last year when the lira slumped after the central bank gradually cut its policy rate in an unorthodox easing cycle long sought by President Tayyip Erdogan.
The government has said inflation will fall with its economic programme prioritising low rates to boost production and exports with the aim of achieving a current account surplus.
The domestic producer price index was up to 4.78 per cent month-on-month in September for an annual rise of 151.50 per cent.
About the Author
