The Turkish Statistical Institute (TÜİK - TurkStat) announced a large increase of 4.75% in the consumer inflation rate for September 2023 compared with the previous month resulting in a corresponding surge in the annual-to-date rate to 61.53% from 58.94% in the previous month of August 2023, but below the 83.45% rate in September 2022.
The highest monthly increase was in education with 30.27%, followed by alcoholic beverages and tobacco with 10.03%, housing with 5.76%, household goods with 5.22%, entertainment and culture with 4.66%, transportation with 4.35%, restaurants and hotels with 4.15%, miscellaneous goods and services with 3.94%, communications with 3.57%, health with 3.39%, food and non-alcoholic beverages with 3.32%, and clothing and footwear with 2.59%.
The highest annual increase was recorded in restaurants and hotels with 92.48%, followed by education with 80.96%, health with 79.79%, transportation with 76.06%, food and non-alcoholic beverages with 75.14%, alcoholic beverages and tobacco with 67.16%, household goods with 63.75%, miscellaneous goods and services with 59.38%, entertainment and culture with 55.43%, communications with 46.59%, clothing and footwear with 32.54%, and housing with 20.16%.
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-III Inflation Report of July 27th, 2023, the Turkish Central Bank increased its inflation rate forecast for 2023 from 22.3% to 58%. The Bank increased its forecast for 2024 yearend to 33% and for 2025 yearend to 15%. The unofficial annual inflation rate for September 2023 as prepared by ENAG Inflation Research Group is 130.13%.
The September 2023 inflation rate of 61.53% is still 31.53 percentage points over the Bank’s current policy interest rate of 30%, despite the 21.5 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.