Turkey’s annual inflation passes 80% in August after interest rate cut

Turkey’s annual inflation passed 80% in August, according to official data on Monday, further hitting consumers facing high energy, food and housing costs.

The Turkish Statistical Institute said consumer prices rose by 80.21% from a year earlier, up 0.6 percentage points from the previous month.

Independent experts say inflation is much higher than official statistics. The Inflation Research Group put the annual rate at 181%.

The central bank unexpectedly cut interest rates to 13% in August despite rising prices, a plunging lira and an unbalanced current account. The central bank slashed interest rates by 5 percentage points between September and December last year. The rate then stayed at 14% until last month.

Russia’s invasion of Ukraine and the lira’s decline have stoked inflation. The lira has plunged over 50% against the U.S. dollar since the central bank began cutting rates.

Economists say rising inflation in Turkey is fuelled by President Recep Tayyip Erdogan’s unorthodox belief that high borrowing costs lead to higher prices the opposite to established economic theory.

The government says it hopes to lower interest rates to boost production and exports in a bid to reach a current account surplus.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor