Turkey’s battle against high inflation continues, with official figures released today showing a year-on-year increase of 67.1% in February, up from 64.9% in January. In just one month, consumer prices surged by 4.5%, fuelled by the ongoing depreciation of the Turkish lira.
The burden of rising prices falls heavily on various sectors, with the most significant increases observed in food (+71.1%), transportation (+78%), healthcare (+81.25%), education (+91.8%), and hospitality (+94.8%). However, independent estimates from the Inflation Research Group (Enag) paint a starker picture, suggesting an even higher inflation rate of 122%.
With the holy month of Ramadan approaching, a time traditionally associated with increased household spending, inflation remains a pressing concern for Turkish citizens. Despite regular increases in wages and pensions, purchasing power continues to erode.
President Erdogan reiterated his stance on the issue yesterday, stating that “deflationary policies will start to be really felt towards the end of the year.” This follows a recent shift by the newly appointed central bank and finance ministry team, who raised the key interest rate from 8.5% to 45% in an attempt to curb inflation.
However, the central bank’s decision to halt further interest rate hikes at the end of February raises questions about the effectiveness of implemented measures and the future trajectory of inflation in Turkey. The country faces an uphill battle in finding a sustainable solution to this pressing economic challenge.
(Source: Amna)