Turkey is unable to control the inflation, at their highest for 25 years. Inflation continues to soar for the 17th consecutive month, with a monthly increase of 85.5% year on year in October according to official figures, but more than 100% according to independent sources.
The Turks continue to see their purchasing power collapse. Nothing seems likely to stop the violent inflationary crisis which has been shaking Turkey for nearly a year and a half. According to official figures from the Turkish Statistical Institute (Tüik) published on Thursday, inflation in Turkey reached 85.5% year on year in October.
Such a price increase had not been observed since 1997 in the country. Prices rose by 3.5% in October alone compared to September.
Inflation in Turkey : Energy surge and currency fall
Estimates consistent with data from the Istanbul Chamber of Commerce, which calculates annual inflation in Turkey of 108.7% and a price increase in October of 3.9% in the Bosphorus metropolis. However, according to independent economists from the Inflation Research Group (Enag), the annual increase in the consumer price index would be much higher, around 185.5% over one year and 7% in October.
According to the Statistical Institute of Turkey, Turkish consumers are particularly affected by the increase in the price of transport (up 117% year-on-year), food (which rose 99% year-on-year) and housing. (an annual increase of 85%). Constrained spending, partly impacted by the global surge in energy prices.
Very dependent on the import of energy, agricultural products and parts for its industry, Turkey is hit by the depreciation of its national currency. The Turkish lira has lost 28% of its value against the dollar since the start of the year and had already collapsed by 44% against the greenback in 2021.
The central bank continues to lower its key rates
However, contrary to the global trend, the Central Bank of the Republic of Turkey (BCRT) is continuing to lower its key rates, in accordance with the unorthodox conceptions of Turkish President Recep Tayyip Erdogan, according to whom, contrary to almost all economists say low interest rates fight inflation.
In October, the Central Bank thus lowered, for the third consecutive month, its main key rate from 12% to 10.5% and has already publicly announced its intention to move to a single-digit rate by the end of the month. ‘year.
“The BCRT has cut interest rates by 350 basis points in its last three meetings. Similarly, it announces a further cut of 150 basis points for November. We believe that the current cycle of rate cuts could continue to weaken the Turkish lira and fuel inflation,” said Enver Erkan, chief economist at Istanbul-based firm Tera Investment.
See you “after the New Year”
The governor of the BCRT, Sahap Kavcıoglu, assumes this policy. Wednesday, November 2, before the Askon, an employers’ union close to power, he said that the decline in key rates would eventually “overcome inflation in Turkey in a sustainable manner.”
A speech in tune with that of President Erdogan, Wednesday evening, who gave an appointment “after the New Year” to those who criticize him on the subject. A reference to a promise made in September by the Head of State: “I think that inflation in Turkey will go down with low interest rates after the New Year and I plead in this direction. »
An opinion that is not shared by many analysts. In an editorial, the benchmark Turkish business daily “Dünya” recalls that the Central Bank’s choices have a strong impact on the real economy and calls on the institution to reconsider its decision.
