Turkey: Inflation rises to almost 80 percent - Erdogan continues to come under pressure

Created: 08/04/2022 05:12

By: Lisa Mayerhofer

The increase in inflation in Turkey does not end - in July the rate jumps to almost 80 percent.

In view of these price increases, people's resentment is also growing.

Ankara – In Turkey, inflation continues to rise from a very high level.

In July, consumer prices rose by 79.6 percent compared to the same month last year, according to the national statistical office in Ankara on Wednesday.

Analysts had expected an even higher inflation rate of 80.2 percent on average.

In the previous month, the inflation rate was 78.6 percent.

On a monthly basis, consumer prices rose by almost 2.4 percent in July.

Inflation in Turkey is driven by several factors

Producer prices show how significant the price pressure is at upstream economic levels.

In July they rose by a good 144 percent compared to the same month last year, after around 138 percent in the previous month.

Producer prices are therefore more than twice as high as a year ago.

Producer prices usually have an indirect effect on the consumer's cost of living, with a time lag.

Inflation in Turkey is driven by several factors.

The weak national currency, the lira, has been driving up prices for a long time since it makes goods imported into Turkey more expensive due to the exchange rate.

In addition, there are problems in the international supply chains that make preliminary products more expensive.

In addition, the prices of energy and raw materials are rising, mainly because of the Russian war against Ukraine.

Inflation in Turkey: Erdogan refuses to raise interest rates

Unlike many other central banks, the Turkish central bank is not fighting the development by raising interest rates.

Experts cite political pressure as the reason.

Turkish President Recep Tayyip Erdogan has balked at interest rate hikes and even prompted the central bank to cut interest rates at the end of 2021, further fueling inflation.

He wants to boost the economy further with low interest rates.

However, experts warn that a large part of the Turkish population is suffering from the consequences of inflation.

Due to the high price increases for energy and food, many find themselves in need of existence.

There are elections next year - and the support for Erdogan among the population is dwindling: According to the Metropoll survey institute, less than half of those surveyed are satisfied with the work of the president - and the trend is falling.