Mind-boggling numbers. Inflation in Turkey hit 73.5% year on year in May, the highest since December 1998, driven by rising energy and food prices, official data showed on Friday. However, consumer price inflation slowed in May compared to the increase seen in April, when inflation jumped from 61% to 70%.
The champions of the soaring prices are transport (+ 107.62% over one year in May) and food products (+ 91.63%), pushed up by the surge in energy and fuel prices. raw materials, and by the collapse of the Turkish lira. Totally dependent on the outside for supplies of gas and oil, Turkey is bearing the brunt of the rise in the price of hydrocarbons and the political and economic decisions of Turkish President Recep Tayyip Erdogan considered inopportune by certain intellectuals.
Rumors of military intervention in northern Syria have contributed for a week to further sink the national currency which quoted Friday morning 16.49 Turkish liras for one dollar. The Turkish lira has lost more than 47.79% of its value year-on-year, approaching December 2021 levels that prompted state intervention to stabilize it against foreign currencies.
A potentially underestimated figure
Inflation is at the heart of the debates in Turkey, one year before the presidential election, scheduled for June 2023, the opposition and many economists accusing the National Statistics Office (Tüik) of knowingly and largely underestimating its magnitude. Independent Turkish economists from the Inflation Research Group (Enag) said on Friday morning that inflation actually reached 160.76% over one year, more than twice the official rate.
Last week, the Turkish central bank refused to raise its key rate in an attempt to curb inflation and kept it at 14%. President Recep Tayyip Erdogan, who believes contrary to classic economic theories that high interest rates promote inflation, had forced the central bank at the end of 2021 to lower its key rate from 19% to 14%, between September and December, causing the collapse of the national currency.