According to official figures issued on Monday, the annual rate of inflation in Turkey rose to 78.6 percent in June, the highest level in 24 years, as President Recep Tayyip Erdogan’s unconventional economic policies continued to have an impact.
Turkish inflation hits two-decade high of 78.6%
However, unofficial figures released by Turkish experts indicated that prices were rising at a rate that was more than double that.
The official statistics office of Turkey announced the highest inflation rate since January 1998.
At the beginning of last year, inflation was 15.0 percent, and it was 73.5 percent in May.
On Friday, Nureddin Nebati, the economy minister, guaranteed that consumer prices would begin to decline in December.
He was quoted by Turkish media as stating, “I swear to you and to the president, we will witness a decline in inflation starting in December.”
In June, the cost of transportation increased by 123.4 percent, while the price of non-alcoholic beverages increased by 94%, according to the official data.
Erdogan ordered the central bank to implement many interest rate cuts last year that he claimed were necessary for his “new economic model,” which is when Turkey’s crisis began.
Despite an increase in consumer prices, the policy rate decreased.
However, the Turkish leader disagrees with mainstream economic theory and asserts that rising interest rates drive up prices.
According to economists, his strategy has made the global suffering brought on by the rise in food and energy prices as a result of Russia’s invasion of Ukraine worse.
concerns about the data
But more and more analysts are beginning to doubt Turkey’s official statistics.
Consumer prices increased by 175 percent in June, according to the ENAG organization of independent economists in Turkey, which released its monthly report on Monday.
According to ENAG, the increase in prices since the year’s beginning has been 71.4 percent.
The largest city in Turkey, Istanbul, has a 94 percent annual rate of inflation, according to the chamber of business there.
No longer does anyone genuinely believe official Turkish data, according to Timothy Ash, economist at BlueBay Asset Management.
There is no hope for even a remotely plausible policy solution.
For the second time in a year, Turkey significantly increased the minimum wage on Friday to lessen the financial impact on households before the general election of 2019.
The nominal minimum salary has increased by almost twice as much since the end of last year with the increase in net monthly take-home pay to 5,500 liras ($330).
In late December, it was 2,826 liras, and in January, it was 4,253 liras.
Economists caution that raising the pay of a sizable portion of the population will cause inflation and should be accompanied by increases in interest rates or other spending restrictions.
According to official statistics, more than 40% of Turks were employed at minimum wage at the beginning of the year.