Turkey’s Annual Inflation Soars Past 78%

People moving around in a busy street in Istanbul, Turkey

Image by Oziel Gómez via Unsplash

Turkey’s annual inflation advanced for the 13th month in a row. Inflation in Turkey was 78.6% in June 2022, marking the highest inflation rate since September 1998. Monthly June inflation was 4.95%.

This current inflation rate in Turkey is a far distance from what the Turkish Statistical Institute reported in the same period last year. Last year in June, the country recorded an inflation rate of 17.5%.

Turkish citizens are having to deal with advancing prices of various essentials and household goods. Leading in this round of data release are energy costs, up by 151.3% in the period being reported. Transportation costs, as expected, also rose by more than 123%, while housing costs and utilities were not to be outdone, increasing by 75.1%.

Food and alcoholic beverages increased by 93.9% in the same period. This has thrown Turkish citizens into a state of panic as they do not see an improvement in the near term.

Citizens are afraid the continuous plunge of the Turkish Lira, coupled with negative real interest rates, will continue fueling inflation. More so, the Russian-Ukraine war does not seem to be nearing its end anytime soon, putting more pressure on energy and food supply.

Besides the above, the country’s president, Recep Tayyip Erdogan, is another cause for concern. His stance on low-interest rates is not helping inflation in Turkey. He is known for labeling interest rates as ‘the mother of all evil’ and “encouraging” the Central Bank of the Republic of Turkey to keep interest rates low.

As a result, interest rates were lowered to 14% in a round that began in 2020, on the back of Erdogan’s direction. He is widely viewed to have a firm grip on the central bank. However, his stance widely ignores the relationship between interest rates and inflation.

Other countries that compare to Turkey’s inflation.

Turkey is not the only country currently fighting an evil called inflation. Many other countries are feeling the heat of the war between Russia and Ukraine, as well as other economic challenges that began when worldwide lockdowns were implemented in response to the COVID-19 pandemic.

Other countries with double-figure inflation rates include Argentina at 60.7%, Russia, at 17.1%, Brazil, at 11.3%, and Spain, with an inflation rate of 10.2%. Zimbabwe leads the race in Africa, with an inflation rate of 191.60%.