The Turkish Lira (TRY) remained under pressure after October’s Consumer Price Index (CPI) data showed only a marginal easing, with annual inflation at 32.9%. However, the month-on-month increase of 2.3% in the headline index and 2.1% in the core index indicates that underlying price pressures remain persistent, Commerzbank FX analyst Tatha Ghose notes.
Key drivers included food, non-alcoholic beverages, clothing, footwear, and rent. Domestic Producer Price Index (PPI) rose to 27% yoy, marking the third consecutive acceleration, while Istanbul CPI climbed to 40.8% yoy.
“These figures suggest broadening price pressures, challenging the official disinflation narrative,” Ghose said. The Central Bank of Turkey’s (CBT) year-end inflation target of 29% now appears increasingly unlikely. Household inflation expectations also surged, with the 12-month forward expectation reaching 54.4%, fueled by administrative price hikes and rising food costs.
Reflecting these pressures, the USD/TRY pair breached the 42.00 level, as fundamentals for the Lira show no signs of improvement.