Turkey’s annual inflation tops 80% in August after interest rate cut

Turkey’s annual inflation topped 80% in August, official data showed on Monday, hitting consumers hardest as they face high energy, food and housing costs.

The Turkish Statistical Institute said consumer prices rose 80.21 percent from a year earlier, up 0.6 percentage points from the previous month.

Independent experts claim that inflation is much higher than official statistics. The Inflation Research Group put the annual rate at 181%.

The central bank unexpectedly cut interest rates to 13% in August despite rising prices, a plummeting pound and an unbalanced current account. The central bank cut interest rates by 5 percentage points between September and December last year. The rate then remained at 14% until last month.

Russia’s invasion of Ukraine and the decline of the lira fueled inflation. The lira has plunged more than 50% against the US dollar since the central bank began cutting rates.

Economists say Turkey’s rising inflation is fueled by President Recep Tayyip Erdogan’s unorthodox belief that high borrowing costs drive up prices, contrary to established economic theory.

The government says it hopes to lower interest rates to boost production and exports in a bid to achieve a current account surplus.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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