Turkey Braces for More Inflation Angst

Turkey Braces for More Inflation Angst

Turkey recorded 80.2% inflation in August but the worst is yet to come.

The central bank expects consumer prices, a key gauge of inflation, to peak somewhere between 85-90% in the coming months, as energy prices will rise going into the winter months.

Turkey has not seen inflation in single digits in almost three years; the unfortunate side effect of policies that prioritize economic growth and cheap lending. The losers of such an outlook have been the lira and price stability.

The lira lost more than quarter of its value against the dollar this year, the worst performer in emerging markets. Inflation is at a 24-year high.

Also Read: Inflation-Scarred Consumers Fuel Turkish Economy by Spending

Yet Turkish officials are unfazed. They think price gains are transitory, blaming Russia’s invasion of Ukraine for causing a global spike in food and commodity costs.

But still much of the damage is self-inflicted. Even stripping out volatile items like food and energy, Turkish inflation has been surging, with the core index shooting past 66% in August, a record high in data going back to 2004.

Also Read: Gas Firm’s Hunt for Dollars Boosts Turkish Coffers to a Record

Loosening inflation’s grip is harder to achieve in Turkey because the central bank