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Turkey's inflation signs of cooling.

Turkey’s red-hot inflation may show signs of cooling when the statistics agency releases its latest data today, more than a year after the central bank began slashing interest rates and driving up prices.

According to a Reuters poll, annual inflation is expected to have fallen to 84.7 per cent in November from 85.5 per cent in October.

Economists said that that would mark the first decline in consumer price inflation in 18 months, as month-on-month price rises begin to slow.

Turkey still has one of the highest inflation rates in the world after its central bank repeatedly cut its benchmark this year under pressure from President Recep Tayyip Erdoğan. The last cut came on November 24, and Turkey’s benchmark rate now stands at 9 per cent.

«This is not disinflation once you remove the base effect,» said Enver Erkan, chief economist at Tera Securities in Istanbul. «Disinflation would require the conviction to implement policies to fight inflation. Instead, we have a loose monetary policy because the priority is growth, which means inflation will continue to be a problem».

Erdoğan wants rapid economic growth to help his chances in an election next year. As a result, the lira has lost almost 30 per cent of its value this year, hitting record lows against the dollar. But his experiment may be running out of steam.

Gross domestic product expanded 3.9 per cent in the third quarter; the statistics agency said last week, a sharp slowdown from a 7.7 per cent expansion in the previous quarter. And the cost of living crisis has driven support for Erdoğan’s ruling party to historical lows as more middle-class Turks see their income fall below the poverty line, which stands at an average of about $1,300 a month for a family of four.

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Comments

  1. Tyson5 December 2022 at 16:12

    If Erdogan wants to get elected next year he needs to pull a big rabbit out of his hat and do it fast. Right now, as things stand, the people will not vote for him as much as before.

    ReplyDelete
  2. Pete5 December 2022 at 17:51

    Things in Turkey are not ok at all and this small fall in inflation doesn't say much and doesn't mean much for people living there. Prices have gone up considerably and people are more upset than ever.

    ReplyDelete

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