SULAIMANI (ESTA) — Turkey’s annual inflation soared to its highest in 19 years, Reuters reported on Monday.
Consumer prices rose 36.08%, outstripping a median forecast of 30.6%, with staples such as transportation and food and drink – which took increasing shares of Turkish households’ incomes during 2021 – rising even faster, Reuters reported.
In December alone, CPI took a rare step into double-digits at 13.58%, the Turkish Statistical Institute data showed.
Turkey’s lira shed 44% of its value last year as the central bank slashed interest rates under a drive by President Tayyip Erdogan to prioritize credit and exports over currency stability.
On Monday it fell a further 4% to 13.7 against the dollar.
One economist forecast that inflation could reach as high as 50% by spring unless the direction of monetary policy was immediately reversed, Reuters said.
“Rates should be immediately and aggressively hiked because this is urgent,” Reuters quoted Ozlem Derici Sengul, founding partner at Spinn Consulting in Istanbul, as saying.
The central bank was however unlikely to act, she added, and annual inflation “will probably reach 40-50% by March”, by when administered price rises would have been added into the mix, including a 50% minimum wage hike.
Last year was the worst for the lira in nearly two decades, while the annual CPI was the highest since the 37.0% reading of September of 2002, two months before Erdogan’s AK Party first took office.
The lira touched a record low of 18.4 against the dollar in December before rebounding sharply two weeks ago after state-backed market interventions, and after Erdogan announced a scheme to protect lira deposits against currency volatility.
(Esta Media Network/Reuters)
