Turkey’s official inflation rate soared to nearly 70% in April, according to data released on Thursday, offering a significant challenge to President Recep Tayyip Erdogan, whose unconventional economic policies are frequently blamed for the country’s economic woes.
The consumer price index increased by 69.97% year on year in April, compared to 61.144% in March, according to the national statistics agency.
Erdogan, defying economic orthodoxy, maintains that significant interest rate cuts are required to bring down skyrocketing consumer costs.
The lira’s depreciation has increased the cost of energy imports, and international investors are increasingly fleeing the once-promising emerging economy.
According to economists, Turkey’s yearly inflation rate — the highest since Erdogan’s ruling AKP party took office in 2002 — is largely due to Erdogan’s unusual economic thinking.
Erdogan has pushed the supposedly independent central bank to reduce interest rates. Despite strong inflation, the bank maintained its benchmark interest rate for the fourth month in a row in April, yielding to criticism.
The transportation industry saw the largest price rise in April, at 105.9%, while food and non-alcoholic beverages cost increased by 89.1%.
In a letter to clients, Timothy Ash, emerging markets analyst at BlueBay Asset Management, said, “True, it’s about food and energy price increases, but it’s also about Turkey’s stunning failure of monetary policy.”
“Inflation is caused by low-interest rates. Period. “Trying to rewrite economics to say the opposite, which is the economics equivalent of calling the planet flat,” he continued, accusing Erdogan of “trying to rewrite economics to say the opposite.”
Nureddin Nebati, the Treasury and Finance Minister, dismissed worries on Monday, stating that the current inflationary tendency was temporary and would “not extend over the long term and be permanent.”
“We will improve our citizens’ welfare and purchasing power over the previous level,” he said.
Shoppers voiced their frustrations about rising prices at a bazaar in an Istanbul neighbourhood on the European side.
“People are going hungry!” When I go shopping, I feel humiliated,” retired woman Rita Ezel told AFP.
“In ten days, my monthly pension will be gone.”
“The prices alter on a weekly basis,” remarked Seckin Gozuyasli, another retiree. Everything is so expensive now: milk, cheese, meat, everything, detergent, everything.”
She blamed rising prices on “bad economic policies” and Turkey’s hosting of 3.6 million Syrian refugees fleeing the turmoil at home.
Turkey has reduced taxes on various items and provided electricity bill subsidies to low-income people, but these measures have failed to reduce inflation.
