Turkey’s official inflation fee hit a 23-year excessive final month as President Recep Tayyip Erdoğan’s unorthodox technique for managing the nation’s $790bn economic system continued to backfire.
The buyer worth index rose 73.5 per cent yr on yr in Could, in keeping with knowledge from the nation’s statistical company, the best degree since October 1998 when Turkey was reeling from a interval marred by unstable coalition governments and financial turmoil.
Meals costs, which have turn into a rising supply of discontent among the many Turkish public, rose 91.6 per cent yr on yr.
Erdoğan, a staunch opponent of excessive rates of interest, had ordered the central financial institution to repeatedly slash borrowing prices within the remaining months of final yr regardless of rising inflation.
The president claimed he was embarking on a brand new financial mannequin that will harness an affordable lira and a increase in exports to carry down inflation by eliminating the nation’s longstanding commerce deficit.
Even earlier than the conflict in Ukraine, critics had described the plan as a high-risk financial “experiment” that risked inflicting a collapse within the worth of the Turkish lira and ushering in runaway inflation.
Russian president Vladimir Putin’s invasion of Ukraine has elevated the challenges, as an increase in world power costs pushed up the price of Turkey’s already giant power import invoice and additional stoked inflation.
Whereas Turkey has loved sturdy development because of ultra-loose financial coverage, the hovering price of dwelling has contributed to an erosion of in style help for Erdoğan forward of elections scheduled for June subsequent yr.
Erdoğan final month mentioned those that drew a hyperlink between rates of interest and inflation had been both “illiterate or traitors”.