Inflation in Turkey hits a 24-year high

Today, Monday, the annual inflation rate in Turkey reached its highest level in 24 years, as it accelerated, according to financial reports, for the 15th consecutive month, reaching 80.2% in August on an annual basis.

Since last fall, the rate of inflation has risen, according to the Turkish Statistics Authority, “as the lira fell after the central bank gradually cut the interest rate by 500 basis points to 14 percent.”

Turkish President Recep Tayyip Erdogan believes that, contrary to classical economic theories, high interest rates drive inflation, but this “caused the national currency to fall, leading to higher prices.”

The Turkish president admitted last Tuesday that the biggest problem facing his country is the “cost of living”, but he refused to change his economic policy nine and a half months before the next presidential election.

Turkey’s central bank surprised markets again in mid-August by cutting its key interest rate from 14 percent to 13 percent despite accelerating inflation.

The sharp rise in prices is largely due to the collapse of the Turkish lira, which has lost about 55 percent of its value in a year against the dollar.

Food prices increased by 90.25%, while the prices of furniture and appliances increased by 92.02%, and hotels, cafes and restaurants increased by 80.95%.

Despite two increases in the minimum wage since last January, it has become difficult to bear price increases for a part of the Turks, since the lira fell 44 percent against the dollar last year and has fallen more than 27 percent this year.