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Economy

Turkey’s Annual Inflation Hits New 24-Year High at 83.45%

October 3, 2022

ANKARA — Turkey’s annual inflation reached a new 24-year high of 83.45% in September, according to official data on Monday, pushing the cost of essential goods higher and further hitting households already facing high energy, food and housing costs.

The Turkish Statistical Institute said consumer prices rose by 3.08% from the previous month.

Experts say inflation is much higher than official statistics, and the independent Inflation Research Group on Monday put the annual rate at an eye-watering 186.27%.

Last month, Turkey’s central bank delivered another interest rate cut, lowering the benchmark rate to 12% despite rising prices, a plunging lira and an unbalanced current account. The lira has lost over 50% of its value against the U.S. dollar since the central bank began cutting rates last year.

Russia’s invasion of Ukraine and the lira’s decline have stoked inflation. 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 opposite to established economic theory.

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%, followed by food and non-alcoholic drinks prices at 93%, according to the statistical institute’s data.

 

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