Consumer prices in Turkey reached a new record in August – they have not been more expensive in 24 years. Goods and services rose in price by an average of 80.21 percent compared to the same month of the previous year. In just one month, the price increase has increased by nearly 1.5 percent. With this, the upward trend in inflation continues for the 15th month without interruption.
Expensive raw materials fuel inflation
Last month, transportation costs, including fuel prices, increased by 117 percent, those of food and soft drinks by more than 90 percent, and furniture and household appliances rose by an average of 92 percent compared to August 2021.
Among the main reasons for the increase in prices is Russia’s war against Ukraine, which blew up the prices of raw materials. Turkey is poor in raw materials and relies on imports, and their high prices are currently affecting end consumers directly – not only in Turkey.
Also contributing to the dire situation is the weak Turkish lira, as the raw materials in question are paid for in US dollars. And the devalued Turkish currency makes imports even more expensive.
The peak is expected in autumn
Last year alone, the Turkish lira depreciated by 44 percent against the dollar, and since the beginning of this year – by another 27 percent. The reason for this is the strange policy of the Turkish Central Bank, which, since last autumn, has reduced interest rates in several steps from 19 to 14 percent. The economic logic is different: against rising prices, an increase in interest rates is recommended. Lower interest rates make a currency unattractive to depositors.
President Recep Erdogan is trying to stimulate the economy with low interest rates. The central bank expects inflation to peak this fall, when it could hit 90 percent, and the Turkish government’s forecast is that inflation will then begin to fall: to 65 percent by the end of the year, and to 25 percent by the end of 2023.
How reliable is the data?
Current polls show, however, that many Turks do not believe the official statistics. Every second person surveyed thinks that prices have increased by much more than what the authorities claim. The same goes for the opposition, as well as many Turkish economists – they also do not believe the official statistics.
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