Inflation rises to 79.6% in July, Erdogan still refuses bank rate increase
Turkish inflation rose to a fresh 24-year high of 79.6% in July, data showed on Wednesday as the lira’s continued weakness and global energy and commodity costs pushed prices higher. Let’s see what Reuters and the Financial Times report on new statistics just released.
ISTANBUL, Aug 3 (Reuters) – Turkish inflation rose to a fresh 24-year high of 79.6% in July, data showed on Wednesday as the lira’s continued weakness and global energy and commodity costs pushed prices higher, though the price rises came out below forecasts.
Inflation began to surge last autumn, when the lira slumped after the central bank gradually cut its policy rate by 500 basis-points to 14% in an easing cycle sought by President Tayyip Erdogan.
Month-on-month, consumer prices rose 2.37% in July, the Turkish Statistical Institute said, below a Reuters poll forecast of 2.9%. Annually, consumer price inflation was forecast to be 80.5%.
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.
FINANCIAL TIMES REPORT
“Turkey’s annual rate of inflation neared 80 per cent in July, heightening pressure on the central bank to raise interest rates despite resistance from president Recep Tayyip Erdoğan”, Leke Oso Alabi of the Financial Times reports from London on Wednesday 03/08/2022.
He mentions that economists had forecast an annual Consumer Price Index (CPI) rate of 80.1 per cent.
Erdoğan has insisted on keeping the central bank’s borrowing rate at 14 per cent, despite prices rising at their fastest in decades, rejecting the established economic orthodoxy that raising interest rates will help to curb inflation.
The true level of inflation is higher than the official figures, according to some analysts and opposition parties. Turkey’s CPI has remained in the double digits for most of the past three years.