Turkey’s annual inflation hits fresh 24-year high of 79.6%

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ISTANBUL, Aug 3 (Reuters) – Turkish inflation rose to a fresh 24-year high of 79.6% in July, data showed on Wednesday as the lira’s continued weakness and global energy and commodity costs pushed prices higher, though the price rises came out below forecasts.

Inflation began to surge last autumn, when the lira slumped after the central bank gradually cut its policy rate by 500 basis-points to 14% in an easing cycle sought by President Tayyip Erdogan.

Month-on-month, consumer prices rose 2.37% in July, the Turkish Statistical Institute said, below a Reuters poll forecast of 2.9%. Annually, consumer price inflation was forecast to be 80.5%.

The biggest annual rise in consumer prices was shown by the transportation sector, up 119.11%, while food and non-alcholic drinks prices climbed 94.65%.

Inflation this year has been fuelled further by the economic fallout from Russia’s invasion of Ukraine, as well as the lira’s continued decline. The currency weakened 44% against the dollar last year, and is down another 27% this year.

Annual inflation is now at the highest level since September 1998, when it was 80.4% and Turkey was battling to end a decade of chronically high inflation.

Last week’s Reuters poll showed annual inflation was seen declining to some 70% by end-2022, easing from current levels as base effects from last year’s inflation surge take effect.

The domestic producer price index climbed 5.17% month-on-month in July for an annual rise of 144.61%.

(Reporting by Berna Suleymanoglu, Oben Mumcuoglu;Writing by Daren Butler;Editing by Ali Kucukgocmen)

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