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Consumer prices rose 4.8% in Turkey in February, bringing annual inflation to a two-decade high of 54.4%, official data showed March 3, as the economic fallout of Russia’s invasion of Ukraine threatens to worsen the country’s inflation woes.
The gap between consumer and producer inflations grew to more than 50 percentage points in February, as producer prices rose 7.2% on a monthly basis and 105% over a year.
The uptick in prices, fueled mainly by the slump of the Turkish lira last year, has plunged Turkey back into the grips of a sticky inflation that threatens to reach an annual of 60%-70%, a level unseen in the past 20 years. Consumer inflation hit 36% in 2021 and monthly price increases were in the double digits in December and January, totaling 26%.
Standing out in the February data is the continued surge in the prices of food, to which the Turkish Statistical Institute (TUIK) assigns the largest weight of 25% in the inflation basket. Faced with simmering popular discontent ahead of elections next year, President Recep Tayyip Erdogan’s government reduced the 8% value added tax on basic foods to 1% last month. Still, food prices soared 8.4%, marked by a 31% increase in vegetable prices that brought annual vegetable inflation to more than 100%. Annual food inflation hit 64.4% — a burden that Turkey’s low- and low-middle-income groups could hardly tolerate.
According to Turk-Is, a leading confederation of trade unions, the cost of a healthy and balanced diet — known also as hunger threshold — rose to 4,553 liras ($322) for a family of four in February, surpassing the monthly minimum wage of 4,250 liras ($300), which is the pay of about half of Turkey’s wage-earners and was raised by 50% as recently as January.
In the transport group, fuel prices rose 10% in February, driven by the increase in global oil prices, while automobile prices increased 1,2%. Fuel prices had soared about 23% in both December and January. This makes for a staggering 66% increase from the beginning of December through February alone. Overall, the transport group saw price increases of 4,5% last month, with the annual rate hitting 75%.
In the durable goods group, the prices of white home appliances and brown goods rose 7% in February and nearly 65% over a year, driven mostly by the increased cost of imported inputs due to the depreciation of the lira.
The prices of services, including health care, education, entertainment, travel and dining, usually trail the prices of commodities. Indeed, consumer commodity prices increased 55% on an annual basis in January, while consumer services prices rose 30%.