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Street scene in Istanbul
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Inflation in Turkey increased significantly in June.
The Turkish statistical office announced that consumer prices rose by 17.5 percent year-on-year.
In May the annual inflation rate was 16.6 percent.
The central bank had then predicted that inflation would gradually decline.
This is particularly relevant because President Recep Tayyip Erdoğan has been putting pressure on the central bank for weeks to lower key interest rates - and enable more growth. Experts had only expected a slight increase to 16.8 percent. Compared to the previous month, consumer prices rose 1.9 percent in June.
In the coming weeks, there could be a new edition of the lira turbulence of the past few years.
The Turkish currency has rapidly depreciated against the dollar and the euro.
One of the reasons: if inflation rises, as in Turkey, bankers all over the world usually counter this by reducing the supply of credit - by raising interest rates.
Many politicians - from Trump to Erdoğan - usually don't like it because higher interest rates can dampen economic growth.
It is therefore important that central banks act politically independently.
The president has undermined the independence of the central bank
This independence is in question in Turkey: President Erdoğan has dismissed numerous central bankers in recent years because their course did not suit him. In speeches and public appearances, he repeatedly calls for interest rate cuts. Economists therefore fear that the Turkish central bank could once again hesitate to resolutely fight higher inflation. It has not achieved its inflation target of five percent for a long time.
The renewed rise in prices was mainly driven by rising food prices.
Compared to the same month last year, groceries were on average 20.0 percent more expensive.
In May the increase was 17.0 percent.
Company producer prices even rose by 42.9 percent in June.
The companies' rising manufacturing costs are likely to have a delayed impact on consumer prices.
The low exchange rate of the Turkish lira makes imports more expensive, while raw material prices are rising worldwide.
Inflationary pressures are therefore likely to remain high.
The country is in a difficult economic situation, which is also reflected in high unemployment - even if the government recently relaxed the corona restrictions in view of falling new infections.
beb / dpa