Turkish Inflation Jumps to Nearly 59%, More Than Expected 

A teller uses a machine to count Turkish lira banknotes at a foreign exchange office in Ankara on July 20, 2023. (AFP)
A teller uses a machine to count Turkish lira banknotes at a foreign exchange office in Ankara on July 20, 2023. (AFP)
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Turkish Inflation Jumps to Nearly 59%, More Than Expected 

A teller uses a machine to count Turkish lira banknotes at a foreign exchange office in Ankara on July 20, 2023. (AFP)
A teller uses a machine to count Turkish lira banknotes at a foreign exchange office in Ankara on July 20, 2023. (AFP)

Türkiye’s annual inflation rate surged to a higher-than-expected 58.94% in August, official data showed on Monday, rising for a second month after a steep fall in the lira currency and recent tax increases.

Month-on-month, consumer price inflation was 9.09%, easing slightly from 9.49% a month earlier. Price rises in transportation drove the monthly measure higher, while price increases for hotels, cafes and restaurants drove the annual measure.

Finance Minister Mehmet Simsek - who has spear-headed a summer policy U-turn meant to rein in prices - said the fight against inflation would take time and patience was needed in the transition period.

"We will do whatever is necessary (monetary tightening, credit policy and income policies) to bring inflation under control and then lower it," he said on the social media site X, formerly known as Twitter.

"We are absolutely determined to fight inflation."

In a Reuters poll, annual inflation was predicted to be 55.9% with monthly inflation seen at 7.0%. In July, the annual figure was 47.83%.

President Recep Tayyip Erdogan's aggressive policy of interest rate cuts set off a currency crisis in late 2021, and sent inflation soaring to a 24-year peak of 85.51% last October.

Since an election runoff in late May this year, the lira has shed 25% of its value as authorities loosened their grip on the exchange rate as part of Erdogan's U-turn toward more orthodox economic policies, including rate rises.

The currency slipped slightly after the price data to 26.78 versus the dollar by 0724 GMT.

The domestic producer price index was up 5.89% month-on-month in August for an annual rise of 49.41%, according to the data from the Turkish Statistical Institute.



Oil Slips as Iran-Israel Conflict Enters Sixth Day

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
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Oil Slips as Iran-Israel Conflict Enters Sixth Day

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo

Oil prices fell on Wednesday, after a gain of 4% in the previous session, as markets weighed up the chance of supply disruptions from the Iran-Israel conflict and as they ponder a direct US involvement.

Brent crude futures fell 93 cents, or 1.2%, to $75.52 a barrel by 0918 GMT. US West Texas Intermediate crude futures fell 88 cents, also 1.2%, to $73.96 per barrel.

US President Trump warned on social media on Tuesday that US patience was wearing thin, and called for an "unconditional surrender" from Iran.

While he said there was no intention to kill Iran's leader Ali Khamenei "for now," his comments suggested a tougher stance toward Iran as he weighs whether to deepen US involvement.

A source familiar with internal discussions said one of the options Trump and his team are considering included joining Israel on strikes against Iranian nuclear sites.

A direct US involvement threatens to widen the confrontation further, putting energy infrastructure in the region at higher risk of attack, analysts say.

"The biggest fear for the oil market is the shutdown of the Strait of Hormuz," ING analysts said in a note.

"Almost a third of global seaborne oil trade moves through this chokepoint. A significant disruption to these flows would be enough to push prices to $120 [a barrel]," the bank added.

Iran is OPEC's third-largest producer, extracting about 3.3 million barrels per day (bpd) of crude oil.

Meanwhile, Iranian ambassador to the United Nations in Geneva Ali Bahreini said on Wednesday that Tehran has conveyed to Washington that it will respond firmly to the United States if it becomes directly involved in Israel's military campaign.

Markets are also looking ahead to a second day of US Federal Reserve discussions on Wednesday, in which the central bank is expected to leave its benchmark overnight interest rate in the range of 4.25% to 4.50%.

However, the conflict in the Middle East and the risk of slowing global growth could potentially push the Fed to cut rates by 25 basis points in July, sooner than the market's current expectation of September, said Tony Sycamore, market analyst with IG.

Lower interest rates generally boost economic growth and demand for oil.

Confounding the decision for the Fed, however, is the Middle East conflict's potential creation of a new source of inflation via surging oil prices.

US crude stocks fell by 10.1 million barrels in the week ended June 13, market sources told Reuters, citing American Petroleum Institute figures on Tuesday. Official Energy Information Administration data is due later on Wednesday.