Turkey’s inflation rises to 48% after consumer prices jump

Shutterstock/Evren Kalinbacak

• Consumer prices up 9.5% from last month
• Hotel, café and restaurants at 82.62% annual inflation
• Interest rate may be hiked to 27.5% before year end

Turkey’s annual inflation rate reached 47.83 percent in July, up from 38.2 percent in June, according to the Turkish Statistical Institute, as its economic woes continue to deepen.

The rate of inflation has slowed after hitting a two-decade high of 85 percent in October 2022.

Consumer prices jumped by 9.5 percent on a month-on-month basis, the data from the government’s official statistics agency showed.

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Housing inflation was at 19.31 percent. Hotels, cafes and restaurants reported the highest annual increase of 82.62 percent.

The central bank revised its year-end inflation forecast to 58 percent last week from its previous estimate of 22.3 percent.

“It’s clear that interest rate hikes are just one part of the new policy shift under way in Turkey at the moment and that monetary tightening further ahead will be gradual,” Liam Peach, senior emerging markets economist at London-based Capital Economics, told Daily Sabah newspaper.

He stated that a possible rise in the policy rate to 27.5 percent by the end of the year was needed to sustain investor confidence.

Turkish authorities have recently taken steps to rein in high inflation and reduce domestic demand.

The central bank hiked interest rates by 9 percent in two months in addition to other tightening measures.

Last month, the central bank raised credit card interest rates, while Turkey’s banking watchdog also stopped credit card payments by instalment for foreign travel and related spending.