FX.co ★ Turkey faces mounting inflation woes

Even after gaining some autonomy, Turkey’s Central Bank is still struggling to contain the country's spiraling consumer prices. The national currency is depreciating at an alarming rate, setting one disheartening record after another. Thus, September was marked by a shocking inflation rate of 61.5%. Apparently, the challenges for the regulator are far from being over, and it is gearing up to delve even deeper into this crisis. Surging inflation in September came as a shock not only to Turkish citizens but also to those seeking sun and holidays from around the globe. According to Turkstat, the country's statistical institute, consumer prices skyrocketed to 61.5% year-on-year, hitting the highest level since last December. Inflation in Turkey has been on a steady upswing for a while, but the past three months have seen an unprecedented escalation, fueled by tax hikes and the weakening lira. In August, inflation was running at 58.9% compared to the previous year. Although September figures came in slightly less than what analysts polled by Trading Economics had anticipated, it offered little solace. A significant acceleration was noted in the cost of utilities, with a 42.3% increase from 25% in August. Similarly, prices for furniture and household appliances surged to 59.1%, up from 58.9% in the preceding month. Conversely, food inflation slowed to 68.9% from 72.9% a month earlier, while transportation services stood at 50.3%, down from the 70.2% rise in August. Healthcare service prices also grew at a slower pace, reaching 70.3%, down from 77.6% in the previous period. The central bank projects that by the year-end, the annual inflation rate will hit 65%. However, forecasts for the coming years are more optimistic, with inflation expected to drop sharply to 33% in 2024, then further to 15.2% in 2025, and eventually to 8.5% by 2026.