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Turkish inflation rate soars to 25 percent

October 3, 2018

The Turkish inflation rate hit 25 percent year-over-year as the economy teeters. President Erdogan responded by calling on the state to raid stockpilers and asking people to inform police of price increases at shops.

Turkish market
Image: picture-alliance/dpa/R. Hackenberg

The annual inflation rate in Turkey soared to nearly 25 percent in September, according to official statistics released Wednesday, the highest level in a decade and a half.

Consumer prices jumped to 24.52 percent in September compared to the same month last year, the Turkish statistics office (TUIK) reported. The latest figures are up from 17.9 percent in August.

Read more: Istanbul locals feeling the pinch of Turkey's economic crisis

The Turkish lira has lost almost 40 percent of its value since the start of the year due to concerns over President Recep Tayyip Erdogan's economic policies and a diplomatic row with the United States.

The lira weakened on the news to 6.03 against the dollar. The currency had fallen to near 7 against the greenback in August until the central bank intervened early last month to increase the main policy rate from 17.75 percent to 24 percent.

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Erdogan calls for raids on stockpilers

The central bank will now be under further pressure to increase interest rates to stem inflation and further losses in the lira. Finance Minister Berat Albayrak, who is Erdogan's son-in-law, said Turkey will announce new measures next week as part of a "total struggle" against inflation. 

Erdogan has repeatedly railed against raising interest rates and his comments often spook markets. He has presented the economic downturn as an orchestrated political attack by Turkey's external enemies.

In a speech to lawmakers from his party on Wednesday, Erdogan urged people and local officials to report any businesses that were stockpiling goods.

"If we identify business stockpiling goods… the state will do what is necessary," he said.

"I'm calling out to my people. In the grocery stores, you are the people who inspect what's going on most closely. If there are really big price differences in the products, in an unprecedented way, then immediately inform the municipal police," he said.

Producers likely to pass on prices to consumers

The latest statistics show Turkey's economic crisis is battering consumers ahead of local elections in March next year.

Prices for food and non-alcoholic drinks rose 27.7 percent year-over-year. Prices for transport rose 36.6 percent and furnishing and household equipment jumped 37.3 percent.

Producer prices also rose 10.88 percent in September compared to a month earlier for an annual rise of 46.15 percent. That suggests further price increases could be passed to consumers.

cw/aw (AFP, AP, Reuters)