Turkey’s annual inflation rate surged to its highest level since 2002 in December, official data showed on Monday, after a currency crisis sparked by unconventional economic policies.
Consumer prices jumped by 36.1% last month from the same period in 2020, up from a 21.3% increase in November, according to the Turkish statistics office.
The figure is the highest since October 2002 when inflation reached 33.45%, before the party of President Recep Tayyip Erdogan came to power. It is also more than seven times the official government target.
Erdogan’s enduring success has often been attributed to the development and prosperity his government enabled after a financial crisis in 2001.
His party rose to power the following year, and he has dominated Turkish politics for the past two decades as both prime minister and president.
But he faces an increasingly difficult path to re-election in polls due to be held by mid-2023.
Opinion polls show him losing in a second-round runoff against most major rivals, and his ruling alliance ceding control of parliament to an increasingly popular group of opposition parties.
But Erdogan has stuck fast to his policies, opposing interest rate hikes - which he calls “the mother and father of all evil” - to combat inflation.
High interest rates are a drag on activity and slow down economic growth. But central banks raise their policy rates out of necessity when inflation gets out of hand.
Erdogan on Monday accused the elite of profiting from “unearned interest income”, sticking by his pledge not to raise borrowing costs.
The Turkish lira lost 44% of its value against the dollar in 2021, with the losses accelerating at the end of last year, after a series of sharp interest rate reductions.
Published in The Express Tribune, January 4th, 2022.
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