ANKARA, Dec 12 Reuters Turkey39;s unemployment rate edged up to 10.2 in October, data showed on Monday, posing a potential challenge to President Tayyip Erdogan39;s reelection hopes next year, even as inflation is set to dip and the currency should remain largely stable.

Economic growth is also expected to keep cooling to below trend levels ahead of presidential and parliamentary elections to be held in May or June, more than 20 years after Erdogan and his AK Party first came to power.

Turkish officials and analysts said jobs and GDP posed election wildcards for the president, whose progrowth political reputation has been bruised in recent years as inflation soared and the lira cratered to historic lows.

Especially before the elections, employment is a problematic situation, said one senior Turkish economy official, requesting anonymity to speak openly.

In response to a currency crash a year ago, authorities adopted a policy of tightly controlling foreign exchange, and officials expect the lira to remain steady well into 2023.

In another relief for Erdogan who faces a tight vote according to opinion polls annual inflation is expected to drop to about 40 by election time, from 85 currently.

JPMorgan analysts expect inflation to hit 40 by mid2023 and then rebound largely due to prevote fiscal stimulus. They said inflation has had a massive impact on real wages, adding they will further hinge on an expected hike to the minimum wage.

The government forecasts…