Turkey’s inflation has reached decades high as the policies implemented by President Tayyip Erdogan continue to hurt Turkey’s economy.
According to July 4, the consumer price index (CPI), an indicator of inflation, rose 78.62% annually and 4.95% monthly in June. press release According to the Turkish Institute of Statistics. This is the highest annual inflation rate since it reached 80.4% in September 1998. On a monthly basis, transportation costs increased 10.59 percent, housing increased 8.34 percent, and food and non-alcoholic beverages increased 2.09 percent.
Transport was the highest on an annual basis, surged 123.37 percent. This was followed by food and non-alcoholic beverages at 93.93%, furniture and household items at 81.14%, hotels, cafes and restaurants at 79.55%, homes at 75.09%, and alcoholic and tobacco at 70.99%.
In an interview with ReutersWitold Bahrke, senior macro strategist at Nordea Asset Management, based in Denmark, has classified Turkey as a “unique league” when it comes to emerging market inflation. He blamed it on the lack of a credible policy response.
“Inflation [emerging markets].. And in Turkey, policy issues also make it a toxic mixture, “Burke said, adding that he expects Lira to be even weaker. Last year, Lira lost 44 percent of its value to the US dollar. This year it is down 21%.
Erdogan’s policy
Turkey faces the same inflationary pressures as other countries, but Erdogan’s policies are said to have exacerbated the crisis, disrupted the value of Lira and made imports more expensive.
In September, Erdogan instructed the country’s central banks to lower interest rates while the central banks of major countries were raising interest rates to combat inflation. Turkey has maintained an interest rate of 14% since December. Prime Minister Erdogan defended his monetary policy, arguing that lowering interest rates would boost exports and lower inflation.
Prime Minister Erdogan said last month that Turkey would continue to lower interest rates rather than raise them, despite the high cost of living. The president expects inflation to drop to “reasonable” levels by February or March next year.
“Given the imbalances, economic soft landing seems to be the best scenario, but achieving it before the elections is neither easy nor desirable,” said Dubai-based East Capital senior. Consultant Emre Akcakmak said. Reuters..
Barclays expects Turkey’s inflation rate to peak at about 88% on an annual basis in October and then slow to 67% by the end of this year.
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Naveen Athrappully is a news reporter on business and global events in The Epoch Times.