Turkish inflation is likely to have accelerated again and may be months away from a new peak, jumping to levels not seen since the 1997 Asian financial crisis, as the central bank clings to its ultra-loose monetary policy.
Rising consumer prices have already forced officials and economists to revise their forecasts several times this year, as efforts to stabilize the lira falter at a time when the conflict between Russia and Ukraine is driving up the cost of everything from food to energy, B92 reports.
Today's official data from the Bureau of Statistics and the Ministry of Finance will show that annual inflation last month reached slightly more than 80 percent, from 78,6 percent in June, according to the median estimate in a Bloomberg survey of 22 analysts. Istanbul, Turkey's most populous city, saw a 99 percent increase in prices in July compared to a year earlier.
"If this kind of monetary policy continues, it will be impossible to beat inflation," said Ogedai Topcular of RAM Capital SA in Geneva.
He added that Turkey's monetary policy is unsustainable.
Turkey is behind only a few countries such as Zimbabwe, Venezuela and Lebanon, where the pace of price growth is in triple digits.
Lowering inflation proved more difficult to achieve in Turkey as the central bank refrained from raising its key rate from 14 percent under pressure from President Recep Tayyip Erdogan. The Turkish leader believes, contrary to the vast majority of world economists, that higher rates cause faster inflation.
This approach has put monetary policymakers out of sync with the most aggressive global monetary tightening since the 1980s and pushed Turkey's interest rates well below zero when adjusted for inflation.
Erdogan aims to keep the economy growing fast ahead of elections scheduled for June next month, even as rising consumer spending eats into disposable income and threatens his popularity.
Turkish authorities have instead relied on macroprudential measures such as curbing the growth of commercial loans, as well as policies aimed at expanding the use of the local currency and channeling capital towards long-term investments.
The results are showing in the currency market, with the lira shedding more than a quarter of its value against the dollar, the year's biggest loss in emerging markets.
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