Inflation continues to soar in Turkey where it reached 85.5% over one year in October. This record had not been reached for twenty-five years.
A percentage that is enough to make you dizzy. On the morning of Thursday, November 3, the economy had to deal with a new inflation in Turkey record set at 85.51% in October over one year against 80.2% in September.
An increase not seen since 1997, explained in particular by the refusal of the Turkish Central Bank to raise its rates.
However, the Turkish lira remained stable on the announcement of these new figures as the rise was expected: the national currency has already lost more than 28% against the dollar since January 1, after having fallen by 44% in 2021.
INFLATION IN TURKEY : TRANSPORT AND FOOD PARTICULARLY WEAKED
According to the Tuik (the official statistics office), the items most affected by this very high inflation in Turkey are transport, up 117% over the last twelve months, food (+99%) and housing (+85%). %) because the latter are linked to the price of energy. This rise makes daily life particularly difficult for the Turks.
These official figures are, however, disputed by independent economists from the Inflation Research Group (Nage) who claim that prices have risen 185% over the year – including 115% since January 1.
Despite two strong increases in the minimum wage this year (+50% in January and +30% in July), inflation is a hot topic in the country a few months before the presidential election scheduled for June 2023, in which the President Recep Tayyip Erdogan will be a candidate for his succession. In Turkey, nearly half (48%) of employees receive the minimum wage, which amounts to 5,500 Turkish liras, or less than 300 dollars (304.70 euros).
CURRENT MONETARY POLICY IN QUESTION
The Central Bank lowered again in October, for the third consecutive month, its main key rate from 12% to 10.5%. Contrary to classical economic theories, President Erdogan asserts that high interest rates promote inflation.
The Head of State, who says he favors growth and exports over price stability, regularly promises that Turkey will “overcome” the problem of inflation after the New Year.
Earlier in the week, Recep Tayyip Erdogan also welcomed the good health of the Turkish economy: “Thank God, the wheels of our economy are turning. Our economic model, which we have summarized as growth through investment, employment, production, export and current account surplus, is bearing fruit”.