Consumer prices in Turkey rose more sharply in December than they have seen in two decades.
(Photo: imago images / ZUMA Wire)
Ankara Inflation in Turkey is getting increasingly out of control: In December, the inflation rate jumped over the mark of 30 percent and reached 36.08 percent year-on-year, the highest level in around two decades, as the Turkish statistical office announced in Ankara on Monday. Analysts were surprised by the strength of the price hike. They had expected a good 27 percent.
The rate has more than doubled since the summer. The increase in the cost of living has recently been driven by higher food prices. From November to December alone, the rate of price increase was 13.6 percent.
In December, producer prices even increased by 79.89 percent year-on-year. The prices that producers charge for their goods will likely, with some delay, at least partially affect consumer prices.
The surprisingly strong rise in inflation is causing problems for the local currency, the lira. In return, the dollar and the euro appreciated by around two percent each to 13,646 and 15,423 lira, respectively.
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The rapid decline in the rate of the Turkish lira, which goes hand in hand with inflation, makes it more expensive to import goods into the country. In addition, there are comparatively high raw material prices on the world market. This is one of the reasons why the country is in a difficult economic situation, which is reflected in high unemployment.
The situation has been worsened for months by the Turkish central bank, which, under pressure from Turkish President Recep Tayyip Erdogan, has recently continued to lower the key interest rate despite high inflation. Central bankers are actually bracing themselves against galloping inflation with higher key interest rates.
The Turkish lira came under pressure on the foreign exchange market on Monday. Compared to the US dollar and the euro, the exchange rate fell by more than two percent in the morning.
More: President Erdogan calls on citizens to save in Turkish lira.