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 polled by Reuters 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.
Economists assume that the inflation rate will still be more than 50 percent at the end of the year – not least as a result of the sharp rise in energy prices after the Russian invasion of Ukraine.
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.
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Inflation has been in the double digits for most of the past five years, eating away at Turkish incomes and savings. Experts blame the central bank for the development. Despite the drastic devaluation of the national currency, the lira, it gradually lowered its key interest rate from 19.0 to 14.0 percent in the second half of 2021. According to most economists, it would have to do the opposite, namely make its own currency more attractive with higher interest rates.
The lira has lost about half its value against the dollar over the past year, fueling inflation. This is because the country, which is poor in raw materials, imports more goods than it exports. Imports are often settled in dollars and other currencies.
Moscow and Kyiv are important suppliers of grain and sunflower oil
President Recep Tayyip Erdogan has long held the unusual view that interest rates cause inflation. Last year he launched a new economic program that prioritizes low interest rates, exports, credit and investment.
Added to this are high oil and energy prices against the background of the war in Ukraine. Russia and Ukraine are also important suppliers of grain and sunflower oil. Cooking oil in particular had recently become much more expensive in Turkey. In April, VAT was reduced on some products such as hygiene items.
Turkey has close ties with Ukraine and Russia. Ankara condemns the invasion but does not participate in sanctions against Russia.
More: The new Erdogan: from splitter to mediator?