Inflation in Turkey rises to 68.5 percent

Inflation in Turkey rises to 68.5 percent


WWhile consumer prices are falling in Europe, they continue to rise in Türkiye. Despite sharp interest rate hikes, inflation in Turkey also rose for the fifth consecutive month in March. However, with an increase of 68.5 percent, the annual rate reported by the Statistical Office remained below analysts’ expectations. They had expected an increase of just under 70 percent. For the economic center of Istanbul, where around a fifth of the 85 million Turks live, the local Chamber of Commerce and Industry had calculated an increase in the cost of living of 78.25 percent for March.

Andreas Mihm

Economic correspondent for Austria, East Central and Southeast Europe and Turkey based in Vienna.

According to official data from Ankara, inflation across the country was 67.1 percent in February. The March value is the highest since the end of 2022. The central bank, which has been combating price increases since June last year with a key interest rate that has gradually increased from 8.5 percent to 50 percent, expects inflation to peak in the spring. However, bank analysts consider their estimates for the decline in the cost of living increase to 36 percent over the course of the year to be exaggerated. They do not expect such a sharp decline in the inflation rate and are instead calculating values ​​between 40 and 48 percent.

From February to March, goods and services rose in price by almost 3.2 percent. Prices for education and restaurant visits, but also for health services, transport and food, once again rose above average. Core inflation, which excludes highly volatile items such as food and energy, rose to 75.2 percent from 72.9 percent in February. According to the Bloomberg agency, this was the highest level since records began. Domestic producer prices, which are considered a barometer for consumer price developments, rose from 47.3 percent in February to 51.5 percent in March.

Endless price rise as the reason for Erdoğan’s election defeat

The unbroken rise in prices is seen as the most important reason why the Turks defeated President Recep Tayyip Erdoğan’s party in the local elections on Sunday and why the opposition CHP was able to expand its majority nationwide in cities such as Ankara, Istanbul, Izmir and Antalya. Erdoğan had admitted his election defeat and promised to stick to the economic and financial policy course that was changed in mid-2023. This is primarily aimed at curbing inflation.

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