Turkey’s official consumer price index (CPI) inflation stood at 62% y/y in September versus 59% y/y in August and 38% y/y in June, the Turkish Statistical Institute (TUIK, or TurkStat) said on October 3 (chart).
At 62%, Turkey left Suriname behind, moving up to sixth place in the world inflation league. Turkey’s next 'rival' is Sudan, which released a 63% y/y inflation rate for February as the latest data provided.
The Istanbul-based ENAG inflation research group of economists, meanwhile, calculated a Turkish inflation figure of 130% y/y for September. The ENAG figure calculated for August was 128% y/y, while for June it was 109% y/y.
In June, following the appointment of Turkey’s post-election new economic team, the central bank's monetary policy committee (MPC) launched its ongoing tightening process, taking the policy rate to 15% from 8.50% with a 650bp hike.
In July, it delivered 250bp. Both moves undershot market hopes and predictions.
On September 21, it delivered another policy rate hike of 500bp, taking the benchmark to 30% in line with market expectations. The gradual monetary tightening will continue, the MPC reiterated.
The authority also reiterated its anticipation of year-end inflation close to the upper boundary of the forecast range provided in the central bank’s inflation report.
The underlying trend in monthly inflation is on course for a decline, the MPC has also observed. Its forecast was borne out as the rise in official inflation slowed following the sharp jumps of July and August.
Moreover, the central bank said it anticipated that official inflation would peak at just below the 70%-level in May 2024.
On November 2, the central bank will release its next inflation report and updated inflation forecasts.
The next MPC meeting is scheduled for October 26. As things stand, it seems another 500bp hike is on the way.
As a result, on September 21, the USD/TRY broke the horizontal barrier set at the 27-level. The latest record high of 27.6726 was registered on October 2. As of October 3, a new trench was being dug around the 27.50-level.