Turkey's inflation eases in October amid Central Bank's aggressive moves
The consumer price index in Turkey increased by 61.36% in October, compared to 61.53% in September, showing signs of easing following aggressive interest rate hikes by the central bank, according to data released on Friday by Turkey's statistics office TUIK.
Economists had been anticipating a slight increase in inflation, given the previous upward trajectory in prices. However, the latest data suggests that Turkey may be starting to gain control over the inflationary pressures that have plagued the nation's economy for months.
Inflation had been on the rise since early summer, although it remained below the peak levels of over 80% reached in the autumn of the previous year. The country has grappled with soaring prices, causing financial stress for its citizens and economic uncertainty.
Notably, food prices continued to outpace other categories in October, rising by a staggering 72% compared to the previous year. Services such as health, education, and hospitality also saw significant increases, contributing to the overall inflation rate. On the other end of the spectrum, housing and apparel experienced a slower rate of increase, at around 26% and 39%, respectively.
This stabilization in inflation comes in the wake of the Turkish central bank's bold move to aggressively raise interest rates in an effort to combat skyrocketing prices. The central bank increased its key interest rate from 30% to 35% at the end of the last month, signaling a departure from the previous loose monetary policy under President Tayyip Erdogan.
Economists are now suggesting that high interest rates may need to be maintained for an extended period to curb inflation and stabilize the Turkish lira. The country's economic future depends on successfully managing these inflationary pressures, and the central bank's commitment to tight monetary policy will play a pivotal role.