Türkiye’s annual inflation at 79.6 percent

ANKARA

Turkish inflation rose to a fresh 24-year high of 79.6 percent in July, official data showed yesterday.

Month-on-month, consumer prices rose 2.37 percent in July, the Turkish Statistical Institute (TÜİK) said. Annually, consumer price inflation was forecast to be 80.5 percent.

The biggest annual rise in consumer prices was in the transportation sector, up 119.11 percent, while food and non-alcoholic drinks prices climbed 94.65 percent.

Inflation this year has been fueled further by the economic impact of Russia’s invasion of Ukraine, as well as the lira’s continued decline. The currency weakened 44 percent against the dollar last year, and is down another 27 percent this year.

Annual inflation is now at the highest level since September 1998, when it reached 80.4 percent and Turkey was battling to end a decade of chronically high inflation.

The domestic producer price index climbed 5.17 month-on-month in July for an annual rise of 144.61 percent.

The government has said inflation will fall as a result of its economic program, which prioritizes low rates to boost production and exports and aims to achieve a current account surplus.

President Recep Tayyip Erdoğan has said that he expects inflation to come down to “appropriate” levels by February-March next year.

“A price stabilization trend has already started,” Erdoğan said two days before the latest inflation report was released.

“We hope that inflation will enter a significant downward trend in the first months of the new year.”

The Turkish Central Bank raised its end-2022 forecast to 60.4 percent last week from 42.8 percent previously. The bank’s inflation report showed the estimated range of inflation reaching nearly 90 percent this autumn before easing.

Jason Tuvey, senior emerging markets economist at Capital Economics, said annual inflation may be approaching a peak with energy inflation falling sharply and food inflation appearing close to topping out.

“Even if inflation is close to a peak, it will remain close to its current very high rates for several more months,” Tuvey said in a note.

“Sharp and disorderly falls in the lira remain a key risk,” he said.