With the rise in food and energy prices, the pace of annual price increase climbed to 58.9% last month, up from nearly 48% in July, according to the Turkish Statistical Institute. The median consensus estimate was 55.9%.

The monthly figure of 9.1% is also well above forecasts. The core index, which excludes volatile items, saw a yearly gain of 64.9%. The cost of food and non-alcoholic beverages, which comprise about a quarter of the inflation basket, increased by 72.9% in August compared to 60.7% in July. Service sector inflation accelerated to 79.6% from 69.7% over the same period. Worse, producer prices, a leading indicator of inflationary pressures, rose 49.4% year-on-year, compared to 44.5%.

Restoring price stability has become a priority since President Recep Tayyip Erdoğan was reelected in May. He then reorganized his economic team by appointing Finance Minister Mehmet Simsek and Central Bank Governor Hafize Gaye Erkan. Efforts to end an era of ultra-low borrowing costs have included three central bank rate hikes to 25% and dismantling some regulations aimed at keeping credit cheap. But the second-largest currency depreciation in emerging markets this year, with the currency losing 30%, continues to ripple through the economy and amplify the impact of recent tax increases announced by the government to fund a growing budget deficit.

The lira’s gains since a larger-than-expected rate hike at the end of August could alleviate some price pressures. However, it is unlikely that the recent appreciation of the lira will trigger price reductions, but it could contribute to a slower pace of price increases for the rest of the year. Most analysts believe that even tighter measures are needed. Median expected inflation for the end of the year rose to 65%, according to a Bloomberg survey of economists conducted from August 25 to 30. The impact of recent measures, including the sharp rate hike, will only be felt after a certain lag. As a result, strong cost pressures continue to drive short-term inflation higher.

After years of a reckless monetary policy advocated by President Erdogan, a deadly earthquake severely impacted the Turkish economy, and rising prices, particularly in food, could worsen an already explosive social situation. Given Turkey’s significance in the region, including the millions of Syrian refugees blocked by payment from the European Union, Turkish instability could ignite the entire region.