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Despite this, Turkey’s monthly inflation rate for June was lower than expected the continued collapse of the lira currency following the re-election of President Recep Tayyip Erdogan.

The consumer price index in Turkey increased by 3.92% month-on-month. official data showed Wednesday. The figure was lower than Reuters’ forecast of 4.84% and compared to May’s 0.04% increase.

The biggest increases were attributed to tobacco and alcoholic beverage prices, which jumped 11.13%, while restaurant and hotel prices rose 4.31%.

Year-on-year inflation rose by 38.21%, also slightly less than the Reuters forecast of 39.47%.

β€œIt could have been a lot worse given the 25% odd rate correction we’ve seen [through] after the election and FX pass through concerns,” Timothy Ash, chief strategist at EM Sovereign BlueBay Asset Management, said in an emailed statement.

Ash added that the central bank will have to “work very hard to bring inflation down meaningfully from here.”

Last October, the inflation rate in Turkey rose to 85%. The Turkish lira last traded at 26.09 against the dollar.

“With Simsk there is at least a chance to master it [through] all without a wider systemic crisis, but there is absolutely no room for political error at this stage,” Ash continued.

Erdogan had appointed former head of economy Mehmet Simsek as his new Minister of Finance and Economy, who was known for his market-friendly policies.

Along with this appointment, a new Governor of the Central Bank of Turkey was appointed, former Wall Street banker Hafez Gaye Erkan.

The central bank raised the country’s key interest rate from 8.5% to 15% last month and confirmed that there will be further gradual tightening of monetary policy until the country’s inflation situation improves.

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