Turkey inflation surges to nearly 25% in Sept, highest in 15 years

A dramatic fall in the Turkish currency fuelled inflation (AFP pic)

ISTANBUL: Turkish inflation surged nearly 25% in September from a year earlier, official data showed on Wednesday, hitting its highest in a decade and a half and underscoring the deepening impact of a currency crisis on the wider economy and consumers.

Turkey’s lira has fallen some 40% this year, hit by concerns about President Tayyip Erdogan’s control over monetary policy and a diplomatic rift with the United States. That sell-off has pushed up prices of everything from food to fuel and eroded investor confidence in what was once seen as a high-flying emerging market.

The lira weakened immediately after the release of the data, which was far higher than forecast. The currency was at 6.0633 to the dollar at 0717 GMT. Inflation rose 24.52% in September from a year earlier, the data from the Turkish Statistical Institute showed.

It rose 6.3% from the previous month, far higher than the 3.6% average increase in a Reuters poll of 15 economists.

Food and non-alcoholic drinks prices, key to consumer price inflation, surged 6.4% month-on-month. Furnishing and household equipment posted the highest monthly increase at 11.41%, followed by transportation at 9.15%, the data showed.

After inflation rose 17.9% year-on-year in August, the Turkish Central Bank signalled that it would take action against “significant risks” to price stability.

It subsequently raised its benchmark rate by a hefty 625 basis points on Sept. 13, the biggest such increase in President Tayyip Erdogan’s 15-year rule, providing some support to the ailing lira.

Producer prices rose 10.88% month-on-month in September for an annual rise of 46.15%, the data showed.