Despite a slight decline, inflation in Turkey remains very high.
(Photo: dpa)
Istanbul Inflation in Turkey fell more than expected in June but remains very high. Consumer prices rose 38.21 percent from a year earlier, slower than May’s 39.59 percent, according to data released by the Bureau of Statistics on Wednesday.
Economists surveyed by the Reuters news agency had only expected a decline to 39.47 percent. However, the central bank’s inflation target of five percent remains a long way off. Among the biggest price drivers are groceries and non-alcoholic beverages, which cost almost 54 percent more than in June 2022.
The central bank initiated a turnaround in monetary policy last month under its new boss Hafize Gaye Erkan because of the sharp rise in prices. The key interest rate was raised from 8.5 to 15.0 percent, while further hikes were signaled at the same time. However, economists had expected a significant step to 21.0 percent.
The fight against inflation is made more difficult by the devaluation of the lira. The national currency fell to a new record low against the dollar this week.
This year alone, the lira has depreciated more than 30 percent against the dollar, after 44 percent in 2021 and 30 percent in 2022. The country, which is poor in raw materials, has to purchase many goods from abroad that have to be paid for in foreign currency.
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Despite persistently high inflation and a flagging economy, President Recep Tayyip Erdogan won the runoff election for the presidency in May. He has repeatedly described himself as an enemy of interest because he wants to boost the domestic economy with cheap money. After his re-election a few weeks ago, however, Erdogan signaled a change in his controversial policy.
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