Turkey: inflation passes the 80% mark in August.
Inflation crossed the 80% mark in August in Turkey, to 80.21% year on year, against 79.6% in July, a record level since 1998, according to official data published on Monday. This very sharp rise in prices is largely explained by the collapse of the Turkish lira, which has lost almost 55% of its value in one year against the dollar.
Contrary to classical economic theories, President Recep Tayyip Erdogan believes that high interest rates promote inflation. But its unorthodox monetary policy has caused the national currency to fall, fueling rising prices. The Turkish Central Bank thus once again surprised the markets in mid-August by lowering its main key rate from 14% to 13% despite galloping inflation.
“The biggest problem we are currently facing is the cost of living,” admitted the Turkish head of state last Tuesday, who however refuses to change his economic policy nine and a half months before the next presidential election. Despite two increases in the minimum wage since January 1, the surge in prices is becoming difficult to sustain for some Turks. The opposition and many economists also accuse the National Statistics Office (Tüik) of underestimating the extent of inflation by more than half.
The Inflation Research Group (Enag), made up of independent Turkish economists, said Monday morning that inflation had reached 181.4% over one year in August. Turkey has experienced double-digit inflation almost continuously since early 2017, but it had never reached such levels since Recep Tayyip Erdogan came to power in 2003.
