Mirza Ozbag, 44, a vendor, waits for customers at his stall at a fresh market in Istanbul, Turkey July 5, 2023. REUTERS/Dilara Senkaya/File photo
ISTANBUL -Turkish annual consumer price inflation climbed to 61.53 percent in September, official data showed on Tuesday, just below expectations and rising for a third consecutive month in response to recent tax hikes and lira weakness.
Month-on-month, consumer price inflation was 4.75 percent. In a Reuters poll, annual inflation was expected to rise to 61.7 percent.
Inflation soared above 85 percent last year after an aggressive rate-cutting cycle sparked a historic currency crash in late 2021. But after winning May elections, President Tayyip Erdogan reversed course and named a new economic team to embrace more orthodox policies including aggressive monetary tightening.
The lira, under less state control, has fallen some 26 percent since the vote and was 0.2 percent weaker on the day at 27.5005 to the dollar. Inflation is seen climbing to about 70 percent by year end and reaching 75 percent around May of next year before cooling, economists and the government say.
Last month the central bank raised its key interest rate by 500 basis points to 30 percent, tightening policy for four straight months. Since the June policy U-turn, it has hiked rates by 2,150 basis points to rein in inflation.
READ: Turkey hikes rates to 30% to strengthen hawkish turn
Following the change in policy, S&P Global Ratings revised its outlook on Turkey to “stable” from “negative” last week, citing moves to cool an overheated economy and stabilize the exchange rate.
Hafize Gaye Erkan, the central bank governor Erdogan named in June, is set to address parliament later on Tuesday.
The domestic producer price index was up 3.40 percent month-on-month in September for an annual rise of 47.44 percent, according to the data from the Turkish Statistical Institute.