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İstanbul’s inflation rate hits 27-month high

(Photo by Adem ALTAN / AFP)

Retail prices in Turkey’s largest city and commercial hub of İstanbul rose 1.88 percent month-on-month in August for an annual increase of 18.89 percent, the city’s highest inflation rate since May 2019, local media reported on Wednesday, citing data from the İstanbul Chamber of Commerce (İTO).

When compared to July, retail prices increased by 4.58 percent for transportation and communications, 2.65 percent for food, 1.06 percent for education, cultural and recreational activities and 0.28 percent for clothing in İstanbul in August, according to İTO figures.

Wholesale prices in the megacity, which is home to some 16 million, increased by 1.42 percent month-on-month in the same period for an annual rise of 28.36 percent, İTO data also showed.

Meanwhile, data from the Turkish Statistical Institute (TurkStat) on Wednesday indicated that the country’s economy grew a massive 21.7 percent year-on-year in the second quarter, rebounding powerfully after a sharp slowdown driven by COVID-19 restrictions in 2020.

It expanded 0.9 percent compared to the previous quarter on a seasonally and calendar-adjusted basis, according to TurkStat.

The lira firmed to as far as 8.29 to the dollar after a close of 8.32, Reuters said in a report on Wednesday.

However, the boom in economic activity is feeding into — and in turn being eroded by — double-digit inflation. Turkey’s annual consumer price inflation rose to 18.95 percent in July 2021 from 17.53 percent in June. It is the highest inflation rate since April 2019.

Driven by consumer demand, depreciation of the lira and a worldwide rise in commodities prices that has left Turkey with some of the sharpest price rises globally, the country’s August inflation reading, which will be announced on Friday, is expected to stay close to the 18.95 percent logged in July.

Commenting on Turkey’s growth data, Treasury and Finance Minister Lütfi Elvan emphasized the importance of tackling inflation.

“For sustainable and comprehensive growth, low inflation, exchange rate stability and predictability are of critical importance,” Elvan said in a tweet.

The Turkish government reimposed curfews, weekend lockdowns and restaurant closures in 2021, including a tougher 17-day lockdown in April and May to curb a surge in COVID-19 cases. Manufacturing and the broader economy were largely unaffected by the measures, which were lifted in June.

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