Turkey inflation rate jumps over 25 per cent to highest level in 15 years

Turkey's annual inflation jumped above 25 per cent in October reaching its highest level in 15 years as the lira crisis continued to hurt the economy.

Consumer prices rose 2.67 per cent on the previous month, with clothing and footwear leading the surge with a price increase of 12.74 per cent, the Turkish Statistical Institute revealed on Monday.

The rise comes after the lira lost around 40 per cent of its value earlier this year, which has led to inflation surging.

It has since gained ground but fell slightly following the news to 5.45 against the dollar.

October data showed the year-on-year inflation change had quickened to 25.2 per cent from 24.5 per cent in September.

The country's central bank raised interest rates sharply in September to 24 per cent, defying President Recep Tayyip Erdogan's public opposition to high interest rates, but left rates unchanged last month.

The latest rise means the bank's policy rate has fallen below inflation.

Turkish finance minister Berat Albayrak also called on the private sector to drop prices by 10 per cent in a bid to combat soaring inflation.

A special hotline was also set up to encourage shoppers to report unusual price hikes.

"I think the (central bank) would be loathe to have to increase policy rates again if the inflation data continues to disappoint as this will just make the recession deeper," said Timothy Ash, a strategist at Blue Bay Asset Management.

"They will assume, rightly, that deflation and recession will eventually do the trick on inflation. But they need time,” he added.