Turkish inflation to extend highest level in two decades in August - poll

Turkey’s consumer price inflation rate, the highest in industrialised economies and emerging markets, was expected to rise above 80 percent in August after the central bank extended a series of interest rate cuts.

Inflation may have accelerated to 81.2 percent last month from 79.6 percent in July, according to the median estimate of 10 institutions in a Reuters poll. That would be the highest reading since August 1998, when inflation was 81.4 percent. Estimates ranged between 80.5 percent and 82.6 percent.

The Turkish central bank, acting on government orders, has cut interest rates by 600 basis points to 13 percent since September last year. It paused at monthly meetings between January and July after the lira slumped against the dollar and euro – the currency has lost 27 percent of its value against the dollar this year after sliding 44 percent in 2021. The bank shocked investors last month will a 100-basis-point cut.

On a monthly basis, prices may rise by 2 percent, Reuters said. Estimates ranged between 1.6 percent and 2.8 percent, it said.

Most Turks do not believe in official inflation data, opinion polls show. Economists estimate what official inflation will be, rather than use data that may cause them to arrive at a different forecast. ENAG Group, an independent group of academics, said last month that annual inflation for July was 176 percent.

Inflation was seen slowing to 70.8 percent by the end of the year, according to the survey. Forecasts ranged between 66 percent and 77 percent.

The Turkish Statistical Institute is due to publish the inflation figures on Monday.

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