Inflation signals pointing upward

Annual inflation has neared 8 percent again. The increase in September?s consumer price index (CPI) that was released at the beginning of the week was above market expectations, at 0.89 percent. At the end of September, the annual inflation was 7.95 percent. 

In a Central Bank statement after last month?s Monetary Policy Committee meeting, it said inflation was expected to increase at the end of September because of the belated effect of foreign currency rate hikes and the increase in the prices of unprocessed food. Despite this, a higher increase rate than what markets expected occurred. 

In an inflation report the Central Bank will issue at the end of this month, it is expected that it will revise its targets. 

The data that drew the attention of markets the most was the increase in core inflation rates. The increase trend that started last month in core inflation continued as well in the month of September. By the end of September, core inflation had hit 8.23 percent for the year.

The significance of this rate is that it will have an impact on ?CPI rates in the future.? In other words, the increase in core inflation shows that CPI increases will continue in the coming months. For this reason, the 8.23 percent rate has been assessed as a dangerous rate. 

The most important reason for the increase in core inflation is the hike in foreign exchange rates. The increase in foreign exchange rates will inevitably further affect the general price level, in other words, the inflation.    

Result of current monetary policy 

Well, why is the hike in foreign exchange rates so high? 

Of course, the global effects are huge; the expectation of the U.S. Fed?s rate increase is causing capital exit from...