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Turkish Inflation Rate Rises to Highest Since 1998

Economic Indicators Oct 03, 2022 06:47AM ET
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By Scott Kanowsky -- The rate of inflation in Turkey rose to its highest mark since 1998 in September, according to data from the Turkish Statistical Institute, extending a recent increase in consumer prices that is believed to be spurred on by president Recep Tayyip Erdoğan's unconventional economic policies.

The reading of Turkey's consumer price index jumped to 83.45% during the month annually, up from 80.21% in August and slightly below economists' estimates of 84.63%. On a month-on-month basis, the figure grew by 3.08%.

The uptick comes after Erdoğan - widely considered the driving force behind decisions taken by Turkey's central bank - reportedly ordered policymakers to slash interest rates recently in a bid to support growth, with borrowing costs most recently lowered twice over the past two months to 12%.

Late last month, Erdoğan doubled down on the policy, claiming that interest is his "biggest enemy." He added that he will call for the rate to come down even further.

Amid this period of easing monetary conditions, the value of the Turkish lira USD/TRY has fallen sharply against the dollar, touching a record low of $18.56 after an almost 28% slide this year.

Analysts at ING said in a note that the elevated cost pressures and the highly accommodative policy stance "hint at further challenges to the outlook" for Turkey's economy. They anticipate annual inflation will peak at above 85% in October before it falls back to around 70% by the end of the year.

Turkish Inflation Rate Rises to Highest Since 1998

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