The prices of services in Türkiye increased by 76.99% annually and by 1.21% monthly in October 2023, according to the latest data from the Turkish Statistical Institute (TurkStat).

The Services Producer Price Index (S-PPI), which measures the changes in the average prices of services provided by enterprises in the domestic market, reached its highest level since the index was first calculated in 2012.

The main drivers of the annual increase in S-PPI were professional, scientific and technical services (92.53%), administrative and support services (95.10%), and accommodation and food services (94.90%).

The monthly increase in S-PPI was mainly influenced by information and communication services (3.03%), transportation and storage services (1.61%), and real estate services (0.36%).

The sectors that saw the lowest annual and monthly changes in S-PPI were water transport services (16.32% and -0.01%, respectively), air transport services (41.67% and -3.09%, respectively), and warehousing and support services for transportation (55.69% and -0.02%, respectively).

The S-PPI data reflects the ongoing inflation crisis in Türkiye, which has eroded the purchasing power of consumers and businesses. The annual consumer price inflation hit 36.17% in October, the highest since 2003.

The Turkish government has announced a series of measures to curb inflation, such as cutting taxes, subsidizing basic goods, and imposing price caps. However, some economists have warned that these interventions could worsen the situation by creating distortions and shortages in the market.

The Turkish lira has also depreciated sharply against the US dollar and the euro, reaching record lows in recent weeks. The currency crisis has increased the cost of imports and foreign debt for Turkey, which relies heavily on external financing.

The Turkish central bank has raised its policy interest rate by 2,650 basis points since June, in an attempt to stabilize the lira and contain inflation. However, the rate hikes have also raised concerns about the impact on economic growth and credit availability. (ILKHA)