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Turkey lira CRISIS: Turkish inflation SOARS as lira weakens


The lira has depreciated as much as 1.6 percent since the official figures were released this morning, according to Bloomberg.

Inflation rose to 24.52 percent in September from a year earlier, the data from the Turkish Statistical Institute showed.

This is compared to the year-on-year figure in August of was 17.9 percent, or a jump of 6.3 percent.

Highlighting how residences and businesses have been feeling the bitter sting of the economy woes, food and non-alcoholic drinks prices surged 6.4 percent month-on-month.

Furnishing and household equipment posted the highest monthly increase at 11.41 percent, followed by transportation at 9.15 percent, the data showed.

Producer prices rose 10.88 percent month-on-month in September for an annual rise of 46.15 percent, according to the data.

Turkey has been gripped by the lira meltdown, which has seen the cost of fuel and food subsequently rocket, further raising concern about the risk to banks and the broader economy.

The currency crisis is rooted in concerns about President Tayyip Erdogan’s influence on the central bank, and being later worsened by escalating tensions with the United States.

Ankara has seen duties on aluminium and steel imported from Turkey doubled on orders by US President Donald Trump.

In response, President Erdogan hit goods imported from the United States with heavy tariffs, with extra duties on products including cars, alcohol and tobacco.

President Erdogan has repeatedly called for lower rates to keep cheaper credit flowing, particularly to the construction industry.

The central bank last month raised interest rates by 6.25 percentage points to try and reign in inflation.

Inan Demir, senior emerging markets economist at Nomura, said: “The central bank will need to react to this.

“This is not something that could be ignored and they will have to hike at their next meeting.” 



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