Türkiye: Inflation in Turkey rises to its highest level since the end of 2022

Türkiye: Inflation in Turkey rises to its highest level since the end of 2022

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The inflation in the Türkiye rose to its highest level in more than a year in March. The Turkish statistics institute Tuik said consumer prices were on average 68.5 percent higher than in the same month last year. This is the highest value since the end of 2022. In February, the inflation rate was still around 67 percent.

According to Tuik, goods and services rose in price by almost 3.2 percent in March alone. Educational offerings, hotels, cafés and restaurants as well as the areas of health, transport and food were particularly affected.

The inflation figures in Turkey published by the Turkish Statistical Office have been questioned by independent experts for years. The Enag research group contradicts the official figures and assumes much higher values. For March, the experts put the inflation rate at almost 125 percent compared to the same month last year.

In 2023, interest rate opponent Erdoğan changed his financial policy

One reason for the high inflation is the significant loss in the value of the Turkish lira. While one euro was still worth around three Turkish lira at the end of 2015, the rate is now ten times that value at around 35 lira per euro. The exchange rate to the US dollar looks similar. Many imports that have to be paid for in foreign currencies on world markets are made more expensive by the weak national currency. Also the significant increase in the minimum wage at the beginning of the year caused prices to rise.

President Recep Tayyip Erdoğan has been criticized in the past for his interest rate policy. Despite sharply rising prices, he had long vehemently resisted higher interest rates. However, after his re-election as President last year, he initiated the interest rate turnaround – the Turkish central bank raised key interest rates from 8.5 to 45 percent. The key interest rate was surprisingly raised again in March – now 50 percent. The central bank said the “tight monetary policy stance” will be maintained until a “significant and sustained decline” in monthly inflation is evident.

The sharp rise in the cost of living in Turkey is seen as one reason for Erdoğan’s AKP’s defeat in local elections last weekend. The secular opposition party CHP was able to prevail in numerous major Turkish cities – including the capital Ankara and the metropolis of Istanbul.

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