Inflation in Turkiye hits 58.9 percent

Inflation in Turkiye reached 58.9 percent year-on-year in August, marking the highest rate since December 2022, according to the latest official data.

The country's annual inflation rate accelerated for the second consecutive month, from 47.8 percent in July, surpassing market forecasts of 55.9 percent, according to data from the Turkish Statistical Institute.

Since the end of 2019, Turkiye has been grappling with persistent double-digit inflation, which has escalated the cost of living for families across the country.

The rise is mainly attributed to tax rate hikes, rising food prices, and the depreciation of the Turkish lira currency, according to analysis. In comparison, European Union annual inflation was 6.1 percent in July, down from 9.8 percent a year earlier.

While Turkiye's official figures are alarming, they may not even represent the full troubling scale of the issue, reported the Agence France-Presse, or AFP, news agency.

Independent economists from the Inflation Research Group estimate the annual increase in consumer prices could be as steep as 128 percent.

To curb inflation, the Turkish Central Bank, whose mission is to ensure price stability, has since June raised its main key interest rate from 8.5 percent to 25 percent. Critics say interest rates were kept low for too long, partly causing the economy to overheat.

When inflation began to accelerate at the end of July, the bank revised its forecasts. It now predicts that inflation will be more than double its previous projections, or 58 percent at the end of this year, before returning to "stability" from 2025, said AFP.

Analysis from ING financial services suggests that after a sharp increase in June and July, the country's Producer Price Index, which is a measure of the average prices that producers receive for their goods and services, "remained on a rapid upswing" with a monthly reading of 5.9 percent.

It said this reflected "a significant jump in the Turkish lira equivalent of import prices due to commodity and exchange rate increases", adding "the data implies that cost pressures have gained strength again".

Analysis from the Trading Economics news website, which refers to official sources, noted that Turkiye's food inflation had reached an eight-month high of 72.9 percent, while further upward pressures came from housing and utilities, transportation, furnishings, household equipment and health.

In addition, it noted that the nation's core rate, which refers to a measure of inflation that excludes certain items that face volatile price movements, rose to a nine-month high of 64.9 percent in August, up from 56.1 percent the previous month.

In contrast to the situation in Turkiye, annual inflation fell in 19 EU member states in July, remained stable in one, and rose in seven.

The lowest annual inflation rates in the EU were registered in Belgium at 1.7 percent, Luxembourg at 2.0 percent, and Spain at 2.1 percent.

The EU's highest annual rates were recorded in Hungary at 17.5 percent, and Slovakia and Poland, both 10.3 percent.