Turkey's inflation rate rose to nearly 25 percent in September, official statistics showed Wednesday, as the economy suffers further from the Turkish lira's dramatic fall. The unexpectedly bad figures come amid continued concerns over domestic monetary policy and the government's steering of the economy as well as a bitter spat with the US which saw the lira fall by 25 percent against the US dollar in August.
Consumer prices rose 24.52 percent in September from the same month last year, up from a 17.9 percent increase recorded in August, according to the Turkish statistics office (TUIK). The figure is the highest since August 2003, the year President Recep Tayyip Erdogan became premier a role he held until 2014 before becoming head of state. The new inflation rate is also significantly higher than the Bloomberg consensus forecast of 21.1 percent.
Finance Minister Berat Albayrak admitted the figures were higher than expected, but insisted: "We have left the worst behind us." Albayrak told NTV broadcaster the government would outline measures to combat inflation next week, adding he believed "the trend in inflation will break in October."
But Inan Demir, an economist at Nomura, believes it is "still too early to say that the worst is behind us as pent-up inflationary pressures have built up in categories ranging from fuel to bread".
The lira was hit hard by a diplomatic row between Nato allies Washington and Ankara over Turkey's detention of an American pastor for two years on terror-related charges.
The row deepened after Washington imposed sanctions on two Turkish ministers and doubled steel and aluminium tariffs in August. The Turkish lira weakened to 6.06 against the US dollar, a loss of 1.5 percent on the day, after the data were released but rallied slightly to 6.04 after 1300 GMT Wednesday.