Turkiye inflation drops to 64% to boost Erdogan
ANKARA, Turkey –
Inflation in Turkiye fell sharply in December mainly due to a favorable base effect – a development that could help President Recep Tayyip Erdogan stand up to the election, but is unlikely to bring relief to other states. households are facing a cost of living crisis.
Consumer prices for the year rose 64.27% in December, the Turkish Statistical Institute announced on Tuesday, down from 84.39% reported in November.
This is the second consecutive month that inflation has fallen after hitting a 24-year high of 85.5% in October. The drop was attributed to a fundamental effect, with the reading being high compared to a year ago according to the data. statistics have reduced the rate of inflation.
While the pandemic and Russia’s invasion of Ukraine have caused inflation around the world, experts say higher prices in Turkiye are driven by Erdogan’s belief that high borrowing costs lead to high prices. than. Traditional economic thinking says that raising interest rates helps control inflation.
Last year, central bank Turkiye cut interest rates by 5 percentage points, to 9% despite high inflation. In contrast, central banks around the world have raised interest rates to combat high inflation.
Erdogan, who faces an election in June, has promised to lower the inflation rate in the new year and is likely to encourage lower consumer prices during his election campaign.
In election preparations, Turkey’s president raised the minimum wage by 55% to ease economic hardship and also announced a measure allowing more than 2 million people to retire early despite warnings. about the additional budgetary burden of this move.
According to official data, consumer prices rose 1.2% in December on a monthly basis, compared with 2.9% in November. The strongest annual price increase was in the housing sector, at close to 80%, followed by the price of food and non-alcoholic beverages at 78%.
Meanwhile, some economists have questioned the state institute’s figures. The inflation research group – which includes independent academics and experts – said on Tuesday that Turkiye’s real inflation rate for December was 135.55%.