Turkey’s runaway inflation soars to near 79% (Al Monitor, July 4, 2022)

Consumer prices in Turkey rose 4.95% in June, bringing annual inflation to 78.6%, the highest reading since 1998, according to official data released Monday.

The spiraling inflation — fueled mainly by the slump of the lira since September when Ankara embarked on a controversial policy to promote growth by pushing the central bank to cut interest rates — threatens to top 100% in the fall if price increases continue at the current pace.

The highest price increases in June were in the transport group, topping 10% on a monthly basis and 123% over 12 months. Fuel prices alone rose 22% in June. In the food group, which has been a major driver of the overall inflation, the increase was limited to 2% in June as vegetable prices dropped 25% with the advent of summer. Nevertheless, annual food inflation reached nearly 94%. The 8.3% rise in housing prices was the second highest in June, bringing the annual increase to 75%.

The cost-of-living crisis is bound to top Turkey’s agenda in the coming months, regardless of whether the next presidential and parliamentary elections are held on time in June 2023 or brought forward.

Despite the heavy blows he is taking from the inflation surge, President Recep Tayyip Erdogan has refused to focus on an anti-inflationist policy, wary of the austerity measures it would require. With crucial polls looming within a year, he is averse to measures that would shrink the markets, lead to company closures and increase unemployment, while forcing the government to tighten spending on social welfare and investments.

Instead, Erdogan has opted to promote growth and reach the elections with an expanding rather than contracting economy. Turkey’s gross domestic product is estimated to have grown more than 5% in the second quarter after expanding 7.3% in the first one. Yet Erdogan’s policy has only fueled inflation, and the economic growth it has produced has been marked by deepening income disparities.

https://www.al-monitor.com/originals/2022/07/turkeys-runaway-inflation-soars-near-79