Turkey’s retail inflation rose for the 17th consecutive month in October, hitting 85.5% year-on-year as food and energy prices continued to surge, according to official data released on Thursday, November 3, 2022. Inflation climbed to a new 24-year high after the central bank cut its policy rate despite the soaring prices.

Also Read: US Federal Reserve hikes interest rates by 75 basis points

Food prices were 99% higher than the same month last year, housing increased by 85% and transport rose 117%, the Turkish Statistical Institute reported.

On a monthly basis, the clothing group led the price surge with 8.34%, food prices increased by 5.09%, and furnishing & household equipment prices increased by 4.38%.

Also Read: Why is RBI MPC holding an off-cycle meet on November 3

Policymakers have blamed inflation on high commodity costs, partially caused by Russia’s invasion of Ukraine, and other factors.

Inflation in Turkey has increased since last November, when the lira (the official currency of Turkey) slumped after the central bank began lowering its policy rate in an easing cycle long sought by President Tayyip Erdogan, running counter to the global tightening cycle.

Also Read: How does a Federal fund rate hike work?

Erdogan refuses to raise interest rates, insisting that it would harm the economy. According to economists and critics, his policies have continued to hurt the lira and push inflation up. He has called for a single-digit policy rate by year-end.

In October, annual inflation was the highest since June 1998, when Turkey was working to end a decade of high inflation.

Also Read: Jamshed J Irani, known as Steel man of India, dies at 86

However, the government’s economic policies prioritize low rates to boost production and exports with the aim of achieving a current account surplus.

In the last three months, Turkey’s central bank cut its policy rates by a total of 350 basis points to 10.5% and promised another cut next month as the final move in the current easing cycle.

Also Read: Did Jair Bolsonaro’s cannibal rhetoric, I’d eat an Indian remark, lose him Brazil polls?

With an election scheduled for June next year, Erdogan tried to reassure voters that inflation would begin to fall in the first quarter of next year. He also promised the government would reduce the burden of higher living costs with significant minimum-wage raises, affordable housing, and cheap loans.