Official inflation in Turkey surged to nearly 80% last month – the highest in 24 years – as President Recep Tayyip Erdogan’s unconventional economic policies continued to push up the cost of living. The Guardian.
Annual price growth rose from 73.5 percent in May to 78.6 percent in June, according to the Turkish Statistics Agency.
However, opposition parties and economists point out that recent increases in oil and gas prices mean that the real rate of inflation is almost double the official figure.
Treasury and Finance Minister Noureddine Nebati tried to fend off criticism of the government’s economic policies, saying last week that consumer prices would begin to fall by the end of the year.
“I promise you and the president that we will see a drop in inflation from December,” Nebati said.
His comments came after the government announced its second increase in the minimum wage in six months, boosting wages by 30%. The increase raised the monthly wage of about 40 percent of the workforce from $254 to $328.
Erdogan claims that Turkey’s problem is not inflation. “We don’t have an inflation problem. We have a cost of living problem,” he said last month.
Economists say Turkey’s official data masks a more troubling trend of rising prices that shows no sign of abating.
A monthly report published by the Turkish group of independent economists ENAG showed that consumer prices rose 175% in June compared to a year earlier. ENAG notes that prices have risen by 71.4% since the start of 2022 alone.
The Istanbul Chamber of Commerce reported that inflation in Turkey’s largest city had reached an annual rate of 94%.
Kemal Kulçdaroğlu, leader of the main opposition party, accused the state statistics agency of “lying”, urging it in a tweet to “stop committing crimes in favor of President Erdogan”.
Turkey was hit hard by the fallout from the European debt crisis in 2012 and the threat of higher interest rates from the US Federal Reserve in 2013. Since then, its currency has been collapsing. In 2013, the pound was worth 80 euro cents, compared to 10 euro cents on Monday.
To stem the decline, in 2018 Erdogan launched what he called a “new economic model,” which meant setting aside rising inflation and cutting interest rates to spur economic growth.
This was done against the advice of its central bank chief and sent the pound falling to a record low, raising costs in a country that is dependent on imports, especially energy.
Inflation, which officially stood at 15% in early 2021, is now at its highest level since the currency collapsed during the 1998 debt crisis that helped bring Erdogan to power.
Three Central Bank governors have been fired by the president since 2018. The Turkish lira has collapsed by 20% this year alone.