Turkish consumer inflation soars to 73.5% (Al Monitor, June 3,2022)

Turkey’s consumer inflation has hit a 24-year high of 73.5% and the Turkish lira has lost 49% of its value since September as President Recep Tayyip Erdogan pursued a controversial policy to lower interest rates and promote growth at the expense of inflation spiraling out of control.

Consumer prices rose 2.98% in May to bring annual inflation to 73.5%, the highest since 1998, according to data released Friday by the Turkish Statistical Institute (TUIK).

The monthly rate was below the projections of economists, rekindling a debate on how reliable the official data is. The median estimates in polls conducted by Reuters and the state-run Anatolia news agency had stood at 4.8% and 5.49%, respectively. Many observers also noted that TUIK, whose chief was controversially fired earlier this year, stopped releasing detailed price tables this month.

“Why is it exactly now that you thought of discontinuing data that has been released since 2003?” asked veteran economic commentator Alaattin Aktas, calling the monthly inflation of 2.98% a “miraculous” decrease from over 7% in April. Some also questioned the widening gap between consumer and producer inflation, which has reached nearly 60 percentage points. Producer prices rose almost 9% in May, with the annual increase topping 132%.

Either way, the announcement of natural gas and electricity hikes of up to 40% earlier this week are a harbinger that consumer inflation will accelerate anew across the board. Annual inflation reaching 100% in the coming months would not be a surprise.