Türkiye's Annual Inflation Rate Climbs to 58.94 Pct in August

Türkiye's annual inflation rate rose to 58.94 percent in August, climbing for a second straight month since it started to slide from October.

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Figures from the Turkish Statistic Institute showed the consumer price index (CPI) in August rose by 9.09 percent monthly.

The annual rate of change in CPI experienced a consecutive decline from a peak of 85.51 percent in October 2022 to 38.21 percent in June 2023, and then headed up to 47.83 percent in July.

On Aug. 24, Türkiye's central bank announced a bigger-than-expected interest rate hike of 750 basis points, from 17.5 percent to 25 percent, to control inflation.

The central bank embarked on a tightening cycle after President Recep Tayyip Erdogan appointed former bankers Hafize Gaye Erkan as central bank governor, and Mehmet Simsek as the head of the Treasury and Finance Ministry in June. Both bankers were considered market friendly.

However, inflation is on an upward momentum because the government implemented tax increases on a wide range of goods to address its budget deficit. Additionally, reconstruction costs rose significantly after the deadly earthquakes in southeastern Türkiye in February.

In July, the central bank more than doubled its year-end inflation forecast to 58 percent, up sharply from 22.3 percent three months ago. The bank expects inflation to peak at around 60 percent by the end of the year, before a gradual drop.