Turkey inflation hits new 24-year high of 83% after rate cuts

ISTANBUL, Oct. 3 (Reuters) – Turkish annual inflation climbed to a new 24-year high of 83.45% in September, lower than expected according to official data on Monday, after the central bank surprised markets with interest rates in recent years. two months to lower.

Inflation has risen since the fall of last year, when the lira collapsed after the central bank gradually cut its key rate in an unorthodox easing cycle that President Tayyip Erdogan has long sought.

Month-over-month consumer prices rose 3.08%, the Turkish Statistical Institute said, compared with a Reuters forecast of 3.8%. On an annual basis, consumer price inflation was estimated at 84.63%.

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It was the highest annual rate since July 1998, when it stood at 85.3% and Turkey battled to end a decade of chronically high inflation.

Inflation in September was driven by transport prices, which rose nearly 118% year-on-year, while food and non-alcoholic drinks prices rose 93.05%.

After the data, the lira traded at 18.5620 against the dollar, weakening from a close of 18.5620 on Friday.

The bank cut its key rate again by 200 basis points to 12% in the past two months, against a global tightening cycle, despite the continued rise in inflation, rising energy prices and the delayed effect of the depreciation of the lira.

Last year’s rate cuts had triggered a currency crisis that wiped out 44% of the lira’s value against the dollar in 2021. It has weakened to new lows by about 29% this year.

Last week’s Reuters poll showed that annual inflation was expected to fall to 72% by the end of 2022.

The government has said inflation will fall with its economic program prioritizing low tariffs to boost production and exports with the aim of achieving a current account surplus.

The domestic producer price index rose 4.78% month-on-month in September, representing an annual increase of 151.50%.

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Reporting by Berna Suleymanoglu and Halilcan Soran; Written by Daren Butler; Editing by Jonathan Spicer

Our Standards: The Thomson Reuters Trust Principles.

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