Turkish CPI inflation surges beyond 60% and more is to come

Güldem AtabayPosted on
Turkish inflation hit a record 61.53% in September according to data from the Turkish Statistical Institute (TÜİK).  The ongoing inertia added the surging energy costs keep pushing up the annual inflation despite significant interest rate hikes since after the elections.  

The September inflation data indicates a 4.75% month-on-month increase, reflecting the dwindling impact of summer tax hikes. This surge in prices, driven largely by the rising cost of food and services, has left Turkish citizens grappling with the economic challenges posed by soaring inflation.

Among the major expenditure groups, housing saw the least increase, with a modest 20.16% rise compared to the same month last year. Conversely, restaurants and hotels experienced the highest increase, soaring by 92.48% year-on-year in September.

In September 2023, the group with the smallest increase compared to the previous month was clothing and footwear, with only a 2.59% rise. In contrast, the group with the most significant increase compared to the previous month was education, skyrocketing by 30.27%.

Excluding raw food products, energy, alcoholic beverages, tobacco, and gold, the Consumer Price Index (CPI) experienced a 5.06% increase compared to the previous month, a staggering 54.66% rise since December of the previous year, and a remarkable 67.22% increase compared to the same month last year.

Hence the core inflation suggests the surge in annual inflation will continue well into the first half of 2024, peaking roughly around 80-85%. The central bank will be pulling up the policy rate to 40-45% from the current 30% and 8.5% before the elections.

ENAG: Annual inflation at 130%

Independent researchers from the Inflation Research Group (ENAG) reported higher figures, with monthly inflation surging by 6.24% in September and a nine-month increase rate of 95.33%.

The rising energy costs have also put pressure on the Turkish lira, which the country is working to stabilize as part of its broader battle against inflation. Analysts from Bank of America Corp. predict that the Turkish currency may weaken to 30 per dollar in the last quarter of 2023.

The Turkish central bank’s rate-setting committee is scheduled to convene on October 26th, with Governor Hafize Gaye Erkan expected to announce the bank’s revised year-end inflation estimates a week later.