Turkey’s annual inflation surged to 78.62% in June, the highest since 1998, according to the Turkish Statistical Institute. It said the consumer prices increased by 4.95% month-on-month in June.
The transportation industry experienced a 123.37% annual price increase, which was the biggest. According to the official statistics, prices for furniture and household equipment grew by 81.14%, while for food and non-alcoholic beverages increased by 93.93%.
In June, the domestic producer price index increased 6.77% month over month and 138.31% annually. In May, Turkey’s annual inflation rate was 73.5%.
According to a report released by Turkey’s ENAG group of independent economists, consumer prices had risen by 71.4% since the start of the pandemic.
The country is undergoing financial woes unseen in decades, with the Turkish lira losing its value since the COVID-19 pandemic. The Russia-Ukraine conflict also worsened the situation, pushing energy prices to new highs.
In spite of strong inflation, the central bank cut its policy rate by 500 basis points from 19% to 14% from September to December, causing the lira to lose more than 40% of its value. Since then, the bank has maintained the same rate.
After the dramatic plummet in 2021, the lira continues its downward trend and has lost over 20% of its value against the US dollar over the past six months.
Recep Tayyip Erdogan, the president of Turkey, is a supporter of low interest rates, arguing that doing so will make investments easier to make in the face of rising inflation. According to economists, Turkey is anticipated to have high inflation through 2022.