Erdogan sees fall in Turkey’s inflation

Dec inflation soared to highest level in president’s 19-year rule

ANKARA:

Turkish President Tayyip Erdogan reiterated his economic policy on Saturday and said that interest rates would be lowered further and inflation would fall as a result.

His comments came days before inflation data for January is announced. He added that Turkey’s economic woes would pass.

Embroiled in a currency crisis fuelled by the central bank’s move to slash rates by 500 basis points since September, Turkey saw December inflation soar to its highest level in Erdogan’s 19-year rule.

A Reuters’ poll on Friday showed it is expected to hit a near 20-year high of 47% in January.

“You know of my battle with interest rates. We are lowering interest rates and we will lower them. Know that inflation will fall too then, it will fall more,” Erdogan told supporters in the Black Sea province of Giresun.

“Exchange rate will stabilise and inflation will fall, prices will fall too, all of these are temporary.”

Turkey’s annual inflation rate surged to 36.1% last month, laying bare the depths of a currency crisis due to the unorthodox policies.

In December alone, consumer prices took a rare step into double digits, rising 13.58%, Turkish Statistical Institute data showed, eating into the earnings and savings of Turks.

The year-over-year CPI outstripped a median Reuters’ poll forecast of 30.6% with staples such as transportation and food - which took increasing shares of household budgets during 2021 - rising even faster.

Turkey’s lira shed 44% of its value last year as the central bank slashed interest rates under a drive to prioritise credit and exports over currency and price stability.

Some economists predict inflation could reach 50% by spring unless the direction of monetary policy is reversed. Goldman Sachs said it would remain above 40% for most of the year ahead.

Published in The Express Tribune, January 30^th, 2022.

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