Turkey inflation reaches highest rate in over 15 years
ISTANBUL - Inflation in Turkey surged to over 25 percent in October from the same period the year earlier, the highest annual rate for over 15 years, official statistics showed on Monday.
Prices have soared in Turkey over the last months as the lira came under pressure, stoking fears over the long-term economic health of the country.
The 25.24 percent inflation rate for October marked a new increase on the 24.52 percent recorded in September. It was the highest annual rate since July 2003, when the country was still emerging from its 2000-2001 financial crisis.
The worst affected sectors included furnishing and household goods with 37.92 percent, according to the Turkish statistics office (TUIK).
From September, prices rose 2.67 percent.
The lira fell dramatically over the summer against a backdrop of market mistrust toward President Recep Tayyip Erdogan's economic policies as well as tensions between Ankara and Washington.
The currency has enjoyed a moderate recovery over the last weeks after the central bank on September 13 increased its main policy rate -- the one week repo auction rate -- from 17.75 percent to 24 percent.
But at its latest meeting on October 25, the central bank kept the headline rate unchanged.
Inflation is now higher than interest rates, pushing what economists call the real policy rate into negative territory.
Jason Tuvey, emerging markets economist at London-based Capital Economics, said October inflation rise was "stronger-than-expected" but unlikely to prompt further rate hikes.
"The central bank is unlikely to follow up September's aggressive interest rate hike with additional tightening," Tuvey said.
Inan Demir, economist at Nomura, said that after its dramatic September move the central bank was in no mood to tighten but the reading should lessen chances it would actually cut rates.
"We do not have high hopes that this inflation print will lead to a change in monetary policy stance in the December rate setting meeting," he said.
"But at least it should encourage the market to price out some of the premature rate cut expectations," he added.
Economists have been concerned over domestic monetary policy in Turkey after Erdogan repeatedly slammed high interest rates, going against economic orthodoxy to claim they cause high inflation and are the "mother and father of all evil".