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Wednesday, February 21, 2024

Turkey’s Inflation Rate Soars to 83%, a New 24-Year High

The three industries with the most price increases are transportation, food, and housing

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Sadaf Hasan
Sadaf Hasan
Aspiring reporter covering trending topics

TURKEY: Turkish consumer prices rose by 3.08% in September, pushing annual inflation to a new 24-year high of 83.45%, according to the nation’s statistical institute, which released its data on October 3—days after the central bank shocked the market with its second rate cut in two months, raising its policy rate to 12%.

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The three industries with the most price increases are transportation, food, and housing. The Inflation Research Group, a group of impartial professionals, calculates the actual yearly rate to be 186.27%.

The 84 million-person nation’s inflation rate has increased dramatically over the past two years, in part because Turkish President Recep Tayyip Erdogan insists on continuing to decrease interest rates rather than raising them, departing from the traditional method of controlling inflation.

“The enemy I struggle with the most is interest. My interest is my greatest foe. Our new interest rate is 12%. Will that do it? It falls short. This needs to drop further lower,” Erdogan stated in a speech to a gathering in late September.

Turkey’s central bank, which is believed to be under Erdogan’s authority , lowered interest rates by 200 basis points to 12% in just the last two months.

After economies were released from COVID lockdowns, inflation started to climb globally, but this year it got worse as a result of Russia’s invasion of Ukraine, which drove up the cost of food and oil.

In a broadcast speech on Monday, Erdogan stated that “we are in a moment where the global economic crisis, compounded by energy and commodity price increases sparked by the pandemic and conflict, has gravely damaged all countries.”

In order to potentially solve the inflation problem, Erdogan remarked, “We will construct the century of Turkey together.”

The Minister of the Economy of the Republic of Azerbaijan tweeted, “We participated in the presentation of the Participation Finance Strategy Document held in Istanbul under the chairmanship of Turkish President Recep Tayyip Erdogan (@RTErdogan). Amidst the global challenges ,the document will make a significant contribution to the development of the # financial system through alternative financing tools, as well as the improvement of the legal, management, and institutional infrastructure for the period 2022–2025.”

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The Turkish Lira hit a new record low

In addition to soaring prices, Turkey has also been experiencing a currency crisis, with the Turkish Lira hitting a new record low versus the dollar after the most recent inflation reading of 18.56.

Transportation cost increases of 117.66%, food cost increases of more than 90%, and price increases of more than 80% all contributed to the increase in inflation in September.

Turkey is currently experiencing its steepest inflation increase since World War II, according to Hakan Kara, the former chief economist of the Turkish central bank.

He claimed that given the government’s unconventional policies, “breaking the record” was unavoidable.

Many economists claim that their policies will reduce inflation in the coming months, but many economists predict that consumer prices will rise and the lira will continue to fall well into the following year.

In a report following Turkey’s most recent rate cut on September 22, Liam Peach, a senior emerging markets economist at Capital Economics, stated in a report that “with external funding constraints tightening, the risks remain firmly skewed to large and disorderly losses in the currency.”

The economic crisis and high inflation are the primary urgent issues that Erdogan’s ruling party needs to address because they have caused its support ratings to reach historic lows in the run-up to the election next year.

Also Read: Natural Gas Prices Hike up to 40%, CNG and PNG Likely to Cost More

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