This very large rise in prices is largely explained by the collapse of the Turkish lira.
Inflation in Turkey surpassed the 80% mark in August over a year, up from 79.6% in July, a record level since 1998, according to official data released today.
This very large rise in prices is largely explained by the collapse of the Turkish lira, which has lost almost 55% of its value against the dollar in a year.
Contrary to classical economic theories, the president Recep Tayyip Erdogan believes that high interest rates favor inflation. But his unorthodox monetary policy has resulted in a decline in the hryvnia, which is fueling rising prices.
So the Turkish central bank once again surprised markets in mid-August by cutting its key interest rate from 14% to 13% despite galloping inflation.
“The biggest problem we’re facing right now is the cost of living,” admitted last Tuesday the head of the Turkish state, who however refuses to change the direction of his economic policy nine and a half months before the next presidential elections.
Despite two increases in the minimum wage since January 1, the rise in prices is difficult for some Turks to deal with.
The opposition and many economists also accuse the National Bureau of Statistics (Tüik) of underestimating the extent of inflation by at least half.
The Inflation Research Group (ENAG), made up of independent Turkish economists, thus claimed this morning that inflation in August reached 181.4% year-on-year.
Turkey has had double-digit inflation almost continuously since the beginning of 2017, but it has never reached such levels since Recep Tayyip Erdogan came to power in 2003.
RES-EMP
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