Inflation in Turkey approached 80% in June, the highest since 1998, despite repeated promises by Turkish President Recep Tayyip Erdogan to rein in price rises twelve months before the end of presidential elections. This strong increase in consumer prices, which stood at 78.6% over the twelve months, compared to 73.5% in May, is largely explained by the collapse of the Turkish lira, which has lost almost half its value against the dollar in a year.
It has never reached such a level since President Erdogan came to power in 2003, who will contest his re-election in June 2023. Inflation is a hot topic in Turkey as price increases disappear week by week due to household purchasing power.
Its calculation is also the subject of heated debate, with the opposition and many economists accusing the National Statistical Office (Tüik) of knowingly and greatly underestimating its magnitude. The Inflation Research Group (Enag), a body of independent Turkish economists, said on Monday morning that inflation actually stood at 175.5% year-on-year, more than twice the official figure.
Loss of confidence in official government data
Fewer than a quarter of Turks say they trust the official inflation index, according to a survey released last week by the Metropol Institute. “No one believes the data anymore [officielles] TurkeyBlueAsset Management analyst and Turkey specialist Timothy Ash commented on Monday.
President Erdogan himself has fueled this mistrust by dismissing four directors of the Statistical Institute since 2019. The stakes are high. unprecedented levels of inflation could reduce the re-election chances of a head of state who has built on his past electoral successes. two decades on its promises of prosperity.
“This Tuïk lie is tantamount to stealing from the pockets of pensioners and civil servants. Stop the crimes @RTERdogan, you will be held accountable.Kemal Kilicdaroglu, the leader of Turkey’s main opposition party, took to Twitter on Monday.
Price-wage loop
This inflation, which is even higher in the country’s major cities such as Istanbul, and which reached 93.3% for food and 123% for transport in June, led the government to announce a 25% increase in the minimum wage on Friday.
This increase, the second of the year after the 50% increase on January 1, is likely to further accelerate consumer price growth in the coming months, creating a wage-price loop in the absence of a hike. Interest rates, experts. to warn 48% of workers receive the minimum wage, which is now 5,500 Turkish lira, or less than $330, according to Turkish Social Security data.
Despite steadily accelerating inflation and fears of new price hikes linked to the war in Ukraine, Turkey’s central bank is still refusing to raise its key interest rate, which has been steady at 14% since December.
Contrary to classical economic theories, President Erdogan believes that high interest rates stimulate inflation. Having been in power since 2003 as prime minister and then as president, the head of the country confirmed at the end of April that inflation will begin to slow down.after May“.
At the beginning of June, the Turkish president said that he wants to lower interest rates again.”We do not have an inflation problem. But cost of living issue“, he said. On Friday, Turkish Economy Minister Nuredin Nebati told him that inflation will begin to slow down only from December.
Source: Le Figaro
I’m Liza Grey, an experienced news writer and author at the Buna Times. I specialize in writing about economic issues, with a focus on uncovering stories that have a positive impact on society. With over seven years of experience in the news industry, I am highly knowledgeable about current events and the ways in which they affect our daily lives.