Turkey’s Inflation has hit 54.4%- the highest in 20 years. Data released on Thursday indicated that the two-decade high was fueled by soaring commodity prices and last year’s crash of the lira currency. The tumbling lira caused a surge in energy and food prices, rousing a lot of discontent on the state of the Turkish economy.
A report from the Turkish Statistical Institute revealed that the country’s consumer prices had increased by 54.4% in February compared to the figure registered 12 months ago, and up from 49% in January.
In comparison, the 19 countries using the Euro recorded an annual inflation increase of 5.8% in February while the United States recorded a 7.5% increase in January- the highest pace in 4 decades. Analysts predict that things will toughen considering Russia’s invasion of Ukraine.
Turkey’s producer price index reached a month-on-month high of 7.22% in February, translating to an annual increase of 105%. This only reflects the predicted rise in commodity prices amid the global tensions attributed to the Russia-Ukraine conflict.
Inflation in Turkey has soared over the last nine months as President Tayyip Erdogan has pushed the central bank to slash its interest rates by 500 basis points in 2021. However, the figure may rise further considering the soaring oil, gas and grain prices.
In a move to meet President Tayyip’s demands, Turkey’s central bank reduced its interest rate points by 5% since September 2021 to 14% in the face of inflationary pressure before initiating a pause in January and February. The Turkish lira has lost its value against the US dollar by 44%.
While food prices increased by over 64%, transportation costs jumped by 75% in February. These occurrences pushed the index to its highest since early 2002. At the moment, the ballooning food and utility prices have caused a significant strain on household budgets.
All Is Not Bad For Turkey
The country has been investing in its infrastructure to support further exports. These investments should help the country have some level of stability. As the country ships out more exports, it can rely on USD imports and maintain some level of significance from a fiscal and monetary standpoint. At the same time, the country does also seem to have a booming level of GDP growth.