Econostrum | Economic News in the Mediterranean

Inflation at its highest in Turkey for twenty years

Written by Frédéric Dubessy on Thursday, May 5th 2022 à 18:10 | Read 339 times

According to the Turkish Statistics Institute, annual inflation hit 70% in April 2022, the highest level in two decades.

Food prices rose by almost 90% year-on-year (photo: F.Dubessy)
Food prices rose by almost 90% year-on-year (photo: F.Dubessy)
TURKEY. Annual inflation in Turkey reached 69.97% in April 2022, the highest level in two decades since Recep Tayyip Erdogan came to power first as Prime Minister and then as President. TÜIK, the national statistics institute, which published the figure on Thursday 5 May 2022, attributed the increase to the war in Ukraine and the rise in energy and commodity prices after the collapse of the Turkish lira in 2021.

Year-on-year, consumer prices rose by 7.25% with a +105.9% surge in the transport sector (including energy prices) and 89.1% in food and non-alcoholic beverages. From one month to the next, prices in the latter category rose by 13.38% and transport by 5.12%.

In April 2022, of the average prices of 409 items included in the Consumer Price Index (CPI), those of twenty-seven items decreased, forty-five remained unchanged, while the average prices of 337 items increased. "An increase in the CPI, excluding unprocessed food, energy, alcoholic beverages, tobacco and gold, was achieved in April 2022 in the CPI (2003=100) of 5.58% compared to the previous month, 22.88% compared to December of the previous year, 57.20% compared to the same month of the previous year, and 30.87% based on 12-month moving averages", the TÜIK says.

This is despite tax cuts on basic commodities and government subsidies for some household electricity bills.

Figures disputed by independent economists

Consumer price index soars in Turkey (graphic: TUIK)
Consumer price index soars in Turkey (graphic: TUIK)
Ankara has embarked on a new economic programme prioritising low interest rates to boost production and exports. The clear objective is to achieve a current account surplus.

President Recep Tayyip Erdogan still does not intend to deviate from his policy. By refusing to raise interest rates, precisely for fear that they would cause inflation, and even by asking the central bank to lower them, the Turkish president is contributing to the collapse of his currency. On the announcement of the latest TÜIK figures, the Turkish lira fell by 0.9% to 14.8525 to the dollar. Since 1 January 2022, it has lost no less than 11% against the greenback.

In February 2022, Nureddin Nebati, Turkish Ministry of Economy, announced that inflation would peak in April 2022. He was right about that. But at the same time he said that it would remain "below 50%.

Independent Turkish economists in the Inflation Research Group (ENAG) dispute these figures, as they do every time TÜIK publishes According to them, inflation is actually 156.86% over one year and 8.68% in April 2022. This is more than twice the official rate. Threatened several times with prison sentences, ENAG's executive director Serkan Gençer has always claimed to be "ready to defend his methodology academically as well as in court, if necessary."

At the end of January 2022, Recep Tayyip Erdogan decided to dismiss TÜIK director Sait Erdal Dinçer from his position as TÜIK director, following the publication of bad statistics. He was the fifth to be so sanctioned since 2019. For the past three years, the ministers of the economy and its central bank presidents have suffered the same fate.

There is little time left for the president to deliver on his January 2022 promise of "a return to single-digit inflation as soon as possible" as the presidential election, scheduled for June 2023, draws ever closer.

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