According to many economists, the Turkish central bank is not fighting high inflation with enough determination.
Inflation in Turkey continued to rise. In June, the cost of living rose to 78.62 percent from the same month last year, as the national statistics office announced on Monday in Ankara. In the previous month, the inflation rate was around 74 percent.
Transport and groceries, in particular, increased significantly in June on an annual basis. Producer costs also continued to rise: according to the statistics office, the prices producers receive for their products rose by around 138% in June over the year. Compared to the previous month, this is an increase of about 6.8 percent. Producer prices generally flow with a time lag and are partially included in consumer prices.
The opposition accuses the government of covering up the inflation figures and assumes a significantly higher rate. Istanbul-based inflation research group Enag even put June inflation at 175.55% year-on-year.
The inflation rate in Turkey is driven by several factors. The weak national currency, the lira, has been causing prices to rise significantly for a long time, as goods imported into Turkey are becoming more expensive. The prices of many commodities are also rising, mainly because of the Russian attack on Ukraine.
In the opinion of many economists, the Turkish central bank is not fighting high inflation with enough determination. Indeed, monetary authorities have loosened their monetary policy since last summer. According to current economic theory, an increase in interest rates can counteract inflation. Turkish President Recep Tayyip Erdogan, on the other hand, argues that high interest rates cause inflation. The central bank is following Erdogan’s line and has so far refrained from raising interest rates. It has kept the benchmark interest rate at 14 percent since January.
(APA/dpa)