According to data released on Thursday, Turkey's annual inflation hit a two-decade high of 69.97 per cent in April, fueled by the Russia-Ukraine conflict and soaring energy and commodity prices following last year's currency fall.
Just over a year before presidential and parliamentary elections that might end President Tayyip Erdogan's long reign, the price rise has put a strain on households.
Erdogan became Prime Minister in 2003 before moving the country to a presidential government, and the unorthodox interest rate cuts implemented last year under his pressure have been blamed for igniting inflation.
Consumer prices increased 7.25 per cent month over month, according to the Turkish Statistical Institute, compared to a Reuters poll prediction of 6 per cent. Consumer price inflation was expected to be 68 per cent on an annual basis.
"It's about food and energy price increases but also the spectacular failure of monetary policy in Turkey - and it's about the abject and total failure of Erdogan’s unorthodox monetary policy," said strategist Timothy Ash at Bluebay Asset Management.
Last year's currency depreciation was sparked by a 500 basis point easing cycle that began in September under Erdogan's urging, resulting in a protracted rise in consumer prices fueled by the aftermath from Russia's invasion of Ukraine.
According to the report, the rise in consumer prices was fueled by a 105.9% increase in the transportation sector, which includes energy prices, and an 89.1% increase in food and non-alcoholic beverage prices.
Food and non-alcoholic beverage prices increased 13.38 per cent month over month, while house prices increased 7.43 per cent.
Following the announcement of the statistics, the lira fell 0.9 per cent to 14.8525 against the dollar.
By June 2023, presidential and legislative elections will be held, and opinion surveys show Erdogan's popularity decreasing.
"The really remarkable thing here is that opinion polls still suggest that the next election is still in the balance. Perhaps that says as much about the opposition as Erdogan," Ash said.
The government claims that under its new economic plan, which prioritises low interest rates to increase output and exports in order to achieve a current account surplus, inflation will fall.
However, due to the war, economists expect inflation to stay high for the remainder of 2022, with the median projection for inflation at year's end at 52 per cent. At the start of the year, the current account deficit grew dramatically. continue reading
According to a Reuters poll released last week, annual inflation is anticipated to reach 52 per cent by the end of the year. Inflation last reached current levels in 2002, when it reached 73.1 per cent in February.
Last week, the central bank predicted that annual inflation would reach approximately 70 per cent by June, before falling to around 43 per cent by year's end and single digits by 2024.
In four meetings this year, the central bank retained its key policy rate at 14 percent and stated that market liraization would be prioritised in measures and policies.
In April, the domestic producer price index increased 7.67 per cent month over month, bringing the yearly increase to 121.82 per cent.
(Source:www.usnews.com)
Just over a year before presidential and parliamentary elections that might end President Tayyip Erdogan's long reign, the price rise has put a strain on households.
Erdogan became Prime Minister in 2003 before moving the country to a presidential government, and the unorthodox interest rate cuts implemented last year under his pressure have been blamed for igniting inflation.
Consumer prices increased 7.25 per cent month over month, according to the Turkish Statistical Institute, compared to a Reuters poll prediction of 6 per cent. Consumer price inflation was expected to be 68 per cent on an annual basis.
"It's about food and energy price increases but also the spectacular failure of monetary policy in Turkey - and it's about the abject and total failure of Erdogan’s unorthodox monetary policy," said strategist Timothy Ash at Bluebay Asset Management.
Last year's currency depreciation was sparked by a 500 basis point easing cycle that began in September under Erdogan's urging, resulting in a protracted rise in consumer prices fueled by the aftermath from Russia's invasion of Ukraine.
According to the report, the rise in consumer prices was fueled by a 105.9% increase in the transportation sector, which includes energy prices, and an 89.1% increase in food and non-alcoholic beverage prices.
Food and non-alcoholic beverage prices increased 13.38 per cent month over month, while house prices increased 7.43 per cent.
Following the announcement of the statistics, the lira fell 0.9 per cent to 14.8525 against the dollar.
By June 2023, presidential and legislative elections will be held, and opinion surveys show Erdogan's popularity decreasing.
"The really remarkable thing here is that opinion polls still suggest that the next election is still in the balance. Perhaps that says as much about the opposition as Erdogan," Ash said.
The government claims that under its new economic plan, which prioritises low interest rates to increase output and exports in order to achieve a current account surplus, inflation will fall.
However, due to the war, economists expect inflation to stay high for the remainder of 2022, with the median projection for inflation at year's end at 52 per cent. At the start of the year, the current account deficit grew dramatically. continue reading
According to a Reuters poll released last week, annual inflation is anticipated to reach 52 per cent by the end of the year. Inflation last reached current levels in 2002, when it reached 73.1 per cent in February.
Last week, the central bank predicted that annual inflation would reach approximately 70 per cent by June, before falling to around 43 per cent by year's end and single digits by 2024.
In four meetings this year, the central bank retained its key policy rate at 14 percent and stated that market liraization would be prioritised in measures and policies.
In April, the domestic producer price index increased 7.67 per cent month over month, bringing the yearly increase to 121.82 per cent.
(Source:www.usnews.com)
