Turkey’s inflation hits 24-year high of 85.5 pct, as Erdogan shuns high interest rate

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Turkish annual inflation climbed to a new 24-year high of 85.51 percent in October, official data showed on Thursday, slightly below forecast, after the central bank by cut its policy rate three times in as many months despite the surging prices.

Month-on-month, consumer prices rose 3.54 percent, the TurkishStatistical Institute said, compared to a Reuters poll forecast
of 3.60 percent.

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Annually, consumer price inflation was forecast to be 85.60 percent.

The domestic producer price index was up 7.83 percent month-on-month in October for an annual rise of 157.69 percent.

Central banks worldwide are raising borrowing costs in efforts to tame soaring consumer prices, but Turkey has bucked the global trend, with President Recep Tayyip Erdogan calling higher interest rates his “biggest enemy.”

Last month, Turkey’s central bank cut its policy rate for a third consecutive time, bringing it down to 10.5 percent from 12 percent.

With an election looming next year, Erdogan argues that high interest rates are the cause of inflation, not the opposite, in defiance of orthodox economic theories.

Consumer prices reached 83.45 percent in September.

On Wednesday, Erdogan praised the state of economy, in an address to his ruling AKP lawmakers in the parliament.

“Thank God, the wheels of the economy are turning,” he said.

“Our economic model, which we have summarized as growth through investment, employment, production, export, and current account surplus, is bearing fruit.”

Many Turks question the credibility of the official government data.

According to a respected monthly study released by independent economists from Turkey’s ENAG research institute, the annual rate of consumer price increases reached 185.34 percent in October.

Read more: Turkey increases electricity, gas prices by 20 pct for homes, 50 pct for industry

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