Turkey’s Inflation Continues to Rising Above 60 Percent
Turkish inflation rose again last month. According to official figures from the Turkish statistical office, the currency depreciation was 61.1 percent annually. That is slightly lower than economists had expected, but it is the highest level in twenty years.
Last week, Turkish companies and households had to deal with significantly higher costs for gas, which further pushed inflation up. Food is also becoming more and more expensive, partly due to the consequences of the war in Ukraine. In February, Turkish inflation stood at 54.4 percent.
Despite high inflation, the interest rate in the country is relatively low. Unlike most economists, President Recep Tayyip Erdogan believes that high-interest rates lead to high prices. Erdogan also wants to use the cheap lira to help his country’s industry.
The Turkish currency has already lost 9 percent against the dollar this year. However, this fall in prices also fuels inflation because imports are actually becoming more expensive. Turkey, for example, is dependent on imports for a large part of its energy.
Due to the influence of Erdogan on the central bank, the president has already fired several central bank heads in recent years, and the chance that interest rates will rise in the short term is small. However, the central bank will decide again next week on the interest rate.