Experts expect that the inflation rate will still be more than 50 percent at the end of the year.
(Photo: dpa)
Istanbul Turkish consumer prices rose more in March than they have in 20 years. They increased by 61.14 percent compared to the same month last year, as the statistics office announced on Monday. Economists surveyed by the Reuters news agency had even expected an inflation rate of 61.6 percent after it had been around 54 percent in February. In a monthly comparison, consumer prices increased by 5.46 percent.
Inflation is particularly high in transport (around 100 percent year-on-year), but food prices also continued to rise. According to the statistics authority, producer prices even increased by around 115 percent year-on-year in March.
The frustration of the Turkish population increases with the prices. Inflation has been in the double digits for most of the past five years, eating away at Turkish incomes and savings.
Two factors are responsible for the sharp rise in prices in Turkey: the war in Ukraine on the one hand, and the increasingly unpopular economic policy of President Recep Tayyip Erdogan on the other.
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Against the background of the war in Ukraine, the prices for oil and other energy sources have recently risen sharply. Russia and the Ukraine are also important suppliers of grain and sunflower oil, which has become scarce not only in Turkey but also in Germany, for example. Cooking oil in particular has recently become much more expensive in Turkey.
While the inflation rate in Germany has recently risen to more than seven percent, it is almost nine times as high in Turkey. Turkey’s inflation is also being fueled by the fact that the lira has lost about half of its value against the dollar over the past year. The country, poor in raw materials, imports more goods than it exports. Imports are often settled in dollars and other currencies.
Many companies are doing well
In addition, the leadership in Ankara is deliberately allowing prices to rise. Erdogan has long held the unusual view that interest rates cause inflation. For this reason, he launched a new economic program last year that focuses on low interest rates, exports, credit and investments. Rising inflation is the natural consequence of such economic policies. Anyone who speaks of an economic crisis when referring to Turkey’s record inflation is only partially correct.
Because many companies in the country are doing well. The fashion manufacturer Mavi, for example, increased its sales by 120 percent in the fourth quarter of 2021 compared to the previous year. Earnings before taxes, depreciation and amortization even grew by 214 percent. Biscuit manufacturer Ülker also reported sales growth of 50 percent.
The high turnover is good for employment. Unemployment recently fell to 11.4 percent after seasonal adjustment. Undeclared work is also flourishing, especially in the construction sector and in agriculture. In other words: Inflation is the price that the economy is still running despite the war and despite the consequences of the corona pandemic.
Economists assume that the inflation rate will still be more than 50 percent at the end of the year. The Turkish central bank is actually aiming for an inflation rate of five percent, but according to its own forecast it will still fall well short of this target in the coming year: the increase should then be an average of 8.2 percent.
With agency material.
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