Turkey's inflation hit two-decade high of 78.62% in June
- Inflation in Turkey in June surged to an annual rate of 78.62%
- It was the highest rate since January 1998
- Inflation had stood at 73.5% in May 2022
Inflation in Turkey in June surged to an annual rate of 78.62%, the highest in 24 years, according to official data released on July 4, as President Recep Tayyip Erdogan’s unconventional economic policies continued to take their toll.
The data released by Turkey’s state statistics agency was the highest since January 1998. The consumer price index saw a rise of 4.95% on a monthly basis, according to the Turkish Statistical Institute (TurkStat). Inflation had stood at 73.5% in May and a 15.0% at the start of last year.
On Friday, Minister of Economy Nureddin Nebati attempted to head off criticism of the government’s handling of the economy, saying that consumer prices will start falling by the end of the year. “I promise to you and to the president, we will see a drop in inflation starting in December,” Nebati said.
The headline inflation was driven by a 123.4% jump in the cost of transportation and a 94% increase in non-alcoholic drinks, as per the data.
The price of household goods increased by 81.8%, the statistics agency reported. Turkey’s economic crisis started when Erdogan forced the central bank to go through with a series of interest rate cuts last year.
The policy rate went down despite surging consumer prices but the Turkish government rejects conventional economics and affirms that high-interest rates cause prices to rise.
On Friday, Turkey substantially raised the minimum wage for the second time in a year to cushion the blow on households. The increase in the net monthly take-home salary to 5,500 liras ($330) means the nominal minimum wage has almost doubled since the end of last year. It stood at 2,826 liras in late December 2021 and 4,253 liras in January 2022.
President Erdogan has claimed that Turkey’s problem is not inflation. “We do not have an inflation problem. We have a cost of the living problem,” he said last month. Economists warned that substantially increasing the pay of a large swathe of the population is an inflationary measure that should be accompanied by interest rate hikes or other methods of limiting spending. According to the official data, more than 40% of Turks earned the minimum wage at the start of the year.