The weak national currency and rising energy and raw material costs are driving the Turkish inflation rate to a new high. Compared to the same month last year, consumer prices have risen by more than 85 percent.
Runaway inflation in Turkey has continued to pick up speed. In October, consumer prices were 85.51 percent higher than a year earlier, according to the National Bureau of Statistics in Ankara. In the previous month, inflation was 83.4 percent. The current increase is the highest since 1997, when the inflation rate was 85.67 percent. For comparison: Germany experienced a 10.4 percent increase in consumer prices in October. On a monthly basis, consumer prices in Turkey rose by 3.5 percent in October.
Consumer prices in the country have been rising sharply for about a year. At the end of 2021, inflation was only around 20 percent. Producer prices, which rose by 157.7 percent year-on-year in October, show how strong the price pressure is at the moment. Producer prices capture producer-level prices by reflecting producer selling prices. The annual rate of producer prices is more than double what it was a year ago. Producer prices affect the consumer's cost of living indirectly and with a time lag.
In Turkey, high inflation is being driven by several factors. The weak national currency, the lira, has been driving up prices for a long time since it makes goods imported into Turkey more expensive. In addition, there are ongoing problems in the international supply chains, which make preliminary products more expensive. In addition, the prices of energy and raw materials are rising, mainly because of the Russian war against Ukraine. In contrast to many other central banks, the Turkish central bank is not fighting the galloping inflation by raising interest rates. In fact, it has recently lowered its key interest rate several times.
