The Turkish Statistical Institute (TÜİK - TurkStat) announced an increase of 3.43% in the consumer inflation rate for October 2023 compared with the previous month resulting in a marginal decrease in the annual-to-date rate to 61.36% from 61.53% in the previous month of September 2023, still well below the 85.51% rate in October 2022.
The highest monthly increase was in clothing and footwear with 13.73%, followed by housing with 7.54%, restaurants and hotels with 3.51%, food and non-alcoholic beverages with 3.20%, miscellaneous goods and services with 3.08%, communications with 2.67%, health with 2.64%, household goods with 2.60%, entertainment and culture with 2.26%, education with 0.29%, and alcoholic beverages and tobacco with 0.09%. A monthly decrease was recorded in transportation with 0.18%.
The highest annual increase was recorded in restaurants and hotels with 94.12%, followed by health with 81.30%, education with 80.83%, food and non-alcoholic beverages with 71.99%, transportation with 71.99%, alcoholic beverages and tobacco with 61.97%, household goods with 60.96%, miscellaneous goods and services with 60.33%, entertainment and culture with 56.96%, communications with 46.70%, clothing and footwear with 39.15%, and housing with 25.98%.
There is much speculation as to the accurateness of the inflation figures produced by TurkStat as ordinary citizens understandably feel that they have experienced a much higher rise in the cost of living over the last year. In its 2023-IV Inflation Report of November 2nd, 2023, the Turkish Central Bank increased its inflation rate forecast for 2023 from 58% to 65%. The Bank increased its forecast for 2024 yearend from 33% to 36% and for 2025 yearend decreased its forecast from 15% to 14%. The unofficial annual inflation rate for October 2023 as prepared by ENAG Inflation Research Group is 126.18%.
The October 2023 inflation rate of 61.36% is still 26.36 percentage points over the Bank’s current policy interest rate of 35%, despite the 26.5 percentage points increase since June 22nd. In light of the government’s intentions to follow a more orthodox monetary approach, we can expect further increases in the Bank’s policy interest rate in order to help curb inflation.