Inflation has skyrocketed in Turkey as official figures from the Turkish Statistical Institute (Tüik) show the country’s inflation rate topped 85.5% year-on-year. Turkey’s inflation has increased for 17 consecutive monthly and hit a 24-year-high last month.
Turkey’s Interest Rate Remains Low, While Inflation Runs Rampant
Turkey, the transcontinental country located in Western Asia has been suffering from financial hardship as the region’s economy is in dire straits. On Nov. 3, 2022, the Turkish Statistical Institute (Tüik) published the country’s official inflation rate figures and stats show the rate reached 85.5% year-on-year.
Reports further indicate that the cost of living in Turkey has risen dramatically and the Tüik report shows that food prices in Turkey climbed 99% higher year-on-year. Turkish citizens saw a 85% increase in rent and housing costs. On Oct. 20, 2022, Turkey’s central bank and Turkish president Recep Tayyip Erdogan cut the region’s benchmark bank rate by 150 basis points (bps).
Stats show that it was the third month in a row of cutbacks. Erdogan stated in September that interest is an enemy. “My biggest battle is against interest. My biggest enemy is interest,” Erdogan stated in late September. He also noted at the time that the interest rate needs to “come down further” despite the red-hot inflation.
The International Monetary Fund (IMF) has also urged Turkey to raise the country’s benchmark rate. Reports say that delegation was sent from the IMF to Ankara and Istanbul to get people from both the public and private sectors to find a solution to Turkey’s economic turmoil.
“Policy rate cuts in late 2021 added to existing vulnerabilities and were followed by lira depreciation and high inflation,” the IMF said. “The mission recommended early policy rate hikes accompanied by moves to strengthen the central bank’s independence. This would reduce inflation faster.
Despite the Turkish Statistical Institute’s official inflation numbers, third-party figures tell a whole different story. Economists stemming from the Inflation Research Group (Enag) detail that Turkey’s annual increase in inflation is closer to 185.5%. According to researchers, the Enag Inflation Index is dynamic and can adjust faster to changing consumption patterns in Turkey.
What do you think about Turkey’s skyrocketing inflation rate and president Recep Tayyip Erdogan suppressing interest rates? Comment below and let us know how you feel about the subject.
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