ANKARA (Reuters) – Turkish annual consumer price inflation dipped for the first time in three months to 61.36% in October, official data showed on Friday, as fallout eased from both the lira’s sharp summer decline and post-election tax hikes.
Month-on-month, inflation was 3.43%.
Price rises in clothing and shoes, houses and hotels, and restaurants drove the monthly measure higher, although it was less than expected in a Reuters poll.
A more than 33% depreciation in the lira and rise in wages, taxe, and fees mainly pushed inflation higher since June.
The rate stood at 61.53% in September.
Inflation is expected to continue rising and peak in May 2024 at around 70-75%, according to the central bank which on Thursday raised its year-end inflation forecasts for this year to 65%.
The median of the forecasts of economists polled by Reuters saw inflation rising to around 69.5% at the end of the year.
With disinflation in focus, the central bank raised its key interest rate by 500 basis points to 35% last week, tightening policy for five straight months. Since June, it has hiked rates by 2,650 basis points to rein in price rises.
President Tayyip Erdogan has in past years repeatedly criticised tight monetary policy, describing himself as an enemy of interest rates. However, following a series of rate cuts over past months, he has recently said tight policy would help bring down inflation. The cuts sparked a currency crisis and inflation to hit more than 85%.
“Despite the latest fall in the annual CPI rate, the long-term outlook remains worrisome,” said Bartosz Sawicki, a market analyst at Conotoxia fintech.
Deeply negative real rates will continue to undermine disinflation efforts, Sawicki said, adding recent circumstances require a bold policy response from the central bank.
The domestic producer price index was up 1.94% month-on-month in October for an annual rise of 39.39%, according to the Turkish Statistical Institute.
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