Turkey's inflation officially crosses 80%, could be as high as 181%

Ankara, Sept 6: According to official data on Monday, Turkey's annual inflation passed 80% in August, further hitting consumers facing high energy, food, and housing costs. The Turkish Statistical Institute said consumer prices rose by 80.21% from a year earlier, up 0.6 percentage points from the previous month.

 

 

 

Independent experts say inflation is much higher than official statistics. The Inflation Research Group put the annual rate at 181%.

 

 

 

The central bank unexpectedly cut interest rates to 13% in August despite rising prices, a plunging lira, and an unbalanced current account. The central bank slashed interest rates by 5 percentage points between September and December last year. The rate then stayed at 14% until last month. Russia's invasion of Ukraine and the lira's decline have stoked inflation. Since the central bank began cutting rates, the lira has plunged over 50% against the U.S. dollar.

 

Also Read: The UK might face balance of payment crisis: Deutsch Bank 

 

Economists say rising inflation in Turkey is fuelled by President Recep Tayyip Erdogan's unorthodox belief that high borrowing costs lead to higher prices - the opposite of established economic theory. The government says it hopes to lower interest rates to boost production and exports in a bid to reach a current account surplus.