Istanbul’s annual inflation soars to 108.77%

Istanbul’s annual inflation soars to 108.77%
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Istanbul Chamber of Commerce said the inflation in Istanbul increased with a monthly rate of 3.96% in October

Retail prices in Turkey’s largest city of Istanbul soared to an annual rate of 108.77% in October, a 24 year high, Istanbul Chamber of Commerce (ICOC) said on Tuesday.

According to data analyzed by the ICOC, Istanbul's inflation was 3.96% compared to September, 81.83% compared to the end of the previous year and 108.77% compared to the same month of the previous year; further widening the gap with the national rate.

Expenses in clothing was the champion in monthly price hikes with 7.98%. Household goods expenditures increased by 6.95% and expenditures for culture and education increased by 2.64%.

New season price increases in clothing and seasonal effect in food prices have been effective in September inflation, a statement by the ICOC said

The official inflation rate in Turkey stands at 83.45% while an independent Inflation Research Group (ENAG) argues the rate is over 186.27%.

Inflation in Turkey has soared since last year, after the central bank gradually cut its policy rate in an unorthodox easing cycle according to the economic policies by President Tayyip Erdogan. 

Erdogan’s “new economy policy” insists on low interest rates based on his unorthodox theory that “interest is the cause, inflation is the result.” 

Turkey’s Central Bank recently decreased its policy rate 150 basis points further down to 10.50% saying it aims to drive economic growth and sustain employment amid growing geopolitical risk.

Erdogan frequently downplayed the increase in Turkey’s inflation promising it will come down next year, saying the inflation was not an “insurmountable economic threat.”