Government promises and reductions in VAT on essential commodities announced earlier this year have not slowed down the upward trend in prices. Official data released by the Turkish Institute of Statistics on Thursday show that prices rose by 7.25% in April, in the midst of the holiday of Ramadan, compared to March and by 69.97% compared to April last year, which represents Turkey ‘s highest inflation since February 2002.
The rise in inflation was primarily due to a 105.9% jump in transport costs, a category that includes energy prices, followed by an 89.1% increase in food and non-alcoholic beverage prices.
Turkish Finance Minister Nureddin Nebati calmed concerns by saying that the current inflationary trend is temporary and will not be prolonged in the long run. “We will increase the well-being and purchasing power of our citizens,” Nureddin Nebati said on Monday.
Instead, economists believe that inflation will remain high for the rest of 2022 due to the war in Ukraine, and the average forecast for inflation at the end of the year is 52%.
“It’s starting to get embarrassing for Turkey. Of course, there is a rise in food and energy prices, but it’s also a dramatic failure of Turkish monetary policy,” said Timothy Ash, a BlueAsset Management analyst and specialist in Turkey.
President Recep Tayyip Erdogan insists that significant interest rate cuts are needed for inflation to fall, an idea that runs counter to conventional economic theories. Despite concerns about rising prices caused by the war between Ukraine and Russia, where Turkey imports energy and grain, Turkey’s central bank has not raised interest rates, which have remained unchanged at 14% since the end of 2021.
Long-running hyperinflation risks hurting the popularity of President Erdogan, who has built his electoral successes over the past two decades on promises of prosperity.
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