Middle East

Turkey’s inflation rate reaches its highest level in 19 years

Ankara: Turkey’s annual inflation rate surged to its highest level since 2002 in December after the currency crisis caused by President Legep Typ Erdogan’s unconventional economic policies. Consumer prices surged to 36.1% from the same period in 2020 last month, up from 21.3% in November, according to the Turkish Census Bureau.

This is the highest since October 2002, when inflation reached 33.45 percent before the Erdogan party came to power. It is also more than seven times the official government target. Erdogan’s lasting success is often due to the development and prosperity his government has made after the 2001 financial crisis.

His Islamic-rooted party came to power the following year and has dominated Turkish politics for the past 20 years as Prime Minister and President. However, as he will be done by mid-2023, the road to being reelected in polls is becoming more and more difficult.

Polls show that he loses to most major rivals in the second round of finals and his ruling alliance transfers control of parliament to an increasingly popular opposition group. .. However, Erdogan opposes raising interest rates to combat inflation (which he calls “all evil mothers and fathers”) and sticks to his policies.

High interest rates hinder activity and slow economic growth. However, central banks inevitably raise the policy rate when inflation gets out of hand. Prime Minister Erdogan yesterday accused the “elite” of benefiting from “unearned income” and stuck to his pledge not to raise borrowing costs.
Lira collapse

The Turkish lira lost 44% of its value against the dollar in 2021, accelerating losses at the end of last year when Prime Minister Erdogan adjusted a series of sharp interest rate cuts. By the time Erdogan announced last month a new currency aid, which was reported to have had a lot of indirect interest rate intervention, the dollar soared to near a record high of 18.4 lira. After the latest inflation rate was announced, the Turkish currency fell another 2%, but the exchange rate fell to about 13 lira per dollar.

At the beginning of 2021, $ 1 was worth 7.4 lira. Monthly inflation has become a politically sensitive issue in Turkey, and opposition leaders claim that the government is pressing statistical agencies to underreport price spikes.

They point to individual measurements made for independent economic institutions such as the Inflation Research Group (ENAG), which calculated an annual inflation rate of 82.8 percent last month. Official measurements show that prices for most staple foods are well above the annual inflation rate.

Milk, yogurt and sunflower oil prices all rose about 75% annually, while chicken prices rose 86%. Prime Minister Erdogan raised his monthly takeaway anger by 50% to 4,250 lira (about $ 310, 275 lira). This is concerned that economists will further contribute to inflation. His government has also significantly increased utility bills such as heat, gas and electricity. – AFP

https://news.kuwaittimes.net/website/turkish-inflation-hits-19-year-high/ Turkey’s inflation rate reaches its highest level in 19 years

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