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Turkey Sees Highest Price Hike in 24 Years

Image Source: DW

According to the most recent government statistics, prices are rising in Turkey at their quickest rate in 24 years. In June, the annual inflation rate—the rate at which prices rise—was 78.62 percent, which was a little higher than forecast.

The Ukraine war made housing and transportation price increases among the most drastic.

Since the Turkish president reduced interest rates last year in an effort to stimulate the economy, inflation has increased.

Impact of Reducing Inflation

In order to reduce inflation, nations typically raise interest rates. But President Recep Tayyip Erdogan has referred to interest rates as “the mother and father of all evil”. He has also adopted more unconventional measures to attempt to tamp down prices. Thus including meddling in foreign exchange markets.

Since interest rates were lowered from 19 to 14 percent last year, the value of the Turkish Lira has decreased. Therefore, making it more expensive for the nation to buy goods from abroad.

According to the most recent inflation statistics, expenditures for transportation increased by 123% in the last year. Food and non-alcoholic beverages came in second with price increases of 94%. While furniture and household equipment costs increased by 81 %. As a result, the total inflation rate was the highest since September 1998. This was when Turkey was trying to end a decade of protracted high inflation, and annual inflation reached 80.4%.

The impacts of a declining currency value are also having an impact on Turkey’s economy as inflation continues to simmer in the country. The Turkish Lira’s value has decreased by almost 50% in the previous year. In light of the rising cost of goods and services, this indicates that consumer purchasing power is decreasing.

Read Also: US President commends Turkish President for allowing Finland and Sweden join NATO

Economists had anticipated the inflation rate to increase even more, despite reaching a 24-year high in June. Official data from Turkey’s statistics agency have fallen short of expectations for the second month in a row, which is fueling doubts about their accuracy. Adding fuel to the fire was the head of the price statistics department’s resignation for “health reasons” before May’s inflation data was released.

Final Words

Turkish residents and workers are having a difficult time, yet favorable currency rates are luring tourists from abroad to Turkey for the summer. However, Turkish tourists are traveling in smaller numbers than in the past, staying for fewer days and spreading the cost of their trip over 10 to 12 months to make ends meet.

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