Turkey’s inflation rate approaches 50% as its overheated economy puts consumers under pressure
As the Bank of England battles rising costs, Turkey is being ravaged by inflation.
Inflation nearly reached 50 percent in July as the overheating economy put consumers under pressure, according to the Turkish Statistical Institute.
Consumer prices rose 47.8 percent last month, a substantial increase from 38.2 percent in June.
Currently the height of the Turkish summer: hotels and restaurants posted the biggest increases in July, rising 82.6 percent. Food costs increased 61 percent.
Turkey is still in the midst of a cost-of-living crisis, even as the new economic team that President Recep Tayyip Erdogan appointed in June continues to undo unconventional policies that have been in place for years.
Squeezed: Turkish consumer prices rose 47.8% last month, a substantial increase from 38.2% in June. In the picture: a street vendor in Istanbul
Under the new finance minister, Mehmet Simsek, Turkey has abandoned its costly defense of the lira and allowed it to plunge by a quarter against the euro since late May.
Simsek has increased taxes on a wide range of goods and services, including a 200 percent increase in taxes on gasoline, to cool demand and recharge government coffers.
Central bank chief Hafize Erkan forecast last week that inflation would hit 58 percent this year, falling to 33 percent by the end of 2024 and 15 percent the following year.
But many economists worry that Erdogan, an opponent of high borrowing costs, won’t let the central bank raise rates high enough to cool inflation.
