In Turkey, prices continue to rise at high double-digit rates.

For April, the statistics office had to announce a further increase in consumer prices by 70 percent year-on-year on Thursday.

In March, the inflation rate was still 61 percent, a value not reached in the 20 years of President Recep Tayyip Erdogan's reign.

Compared to March, consumer prices increased by 7.25 percent in April.

Food prices, in particular, are rising unabated.

And there are no signs of a trend reversal – on the contrary.

Andreas Mihm

Business correspondent for Austria, Central and Eastern Europe and Turkey based in Vienna.

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The official index of producer prices suggests that there is no end in sight to the price increases any time soon.

In April it was almost 122 percent above the previous year's level, compared to the March value it increased by 7.7 percent.

Producer prices usually affect consumers' living costs with a time lag, as producers try to pass their costs on to customers.

Analysts at Deutsche Bank expect inflation to remain above 70 percent through November.

However, some economists doubt that the official index reflects the true rate of inflation in the country.

The members of ENA Grup, an association of Turkish economists at home and abroad who specialize in measuring inflation, put the increase in consumer prices within the past 12 months at 156 percent.

That would be more than double the official measurement.

Doubts about the official statistics

Such calculations, which the opposition likes to take up, are a thorn in Erdogan's side.

In April, Bloomberg reported on a bill that would ban researchers from disseminating data without prior approval from the state statistics agency.

Violations could be punished with imprisonment of up to three years.

Doubts about the official statistics are also fueled by the fact that Erdogan has changed the president of the statistical office several times, as well as the president of the - supposedly - independent central bank, out of dissatisfaction with its monetary and interest rate policy.

Even the official data shows the serious impact on consumers.

Food prices rose by 89 percent in April compared to the previous year, they doubled in the transport industry, and housing costs rose by 70 percent.

Consumers, however, have little confidence in the database and, based on their own experience, have been reporting for months that prices for groceries and rentals or used cars have been doubling.

Politicians have reacted to the inflation with higher pensions, minimum wages and salaries for civil servants, as well as tax cuts, but are unable to control the rapid rise in prices.

Lira is losing ground again

Runaway inflation in Turkey is fueled by several factors.

The weak national currency, the lira, has been causing prices to rise significantly for a long time, since Turkey has to spend more lira on imports to be paid for in dollars and euros or on foreign debts to be settled.

Despite stabilizing around the turn of the year, when the government issued government value guarantees for transfers from FX to lira accounts, the currency is losing ground.

The rise in energy and raw material costs, which has been accelerated again by the Ukraine war, acts on inflation like a fire accelerator, and the global problems caused by fragile supply chains are added to this.

The Turkish central bank is not counteracting the development by raising interest rates, but has actually reduced interest rates despite high inflation rates.

A reversal of this policy, which is directed against all classical economics, is not in sight.

A week ago she had forecast that annual inflation would peak at around 70 percent in June and fall to 43 percent by the end of the year.

Bank analysts consider this to be very optimistic and expect a value of more than 50 percent.

How long will the money last?

The government wants to contain inflation as part of its "new economic program" by boosting production and exports through low interest rates in order to earn foreign exchange and thus close the current account deficit that has existed for years.

In fact, this is expanding due to the high cost of imported goods.

The war in Ukraine is also hampering the hoped-for upswing in the tourism industry, since guests from Russia only come under very difficult circumstances and those from Ukraine no longer come at all.

Russians and Ukrainians made up more than a quarter of all guests in 2021.

According to calculations by Deutsche Bank, the central bank's net reserves, excluding credit lines from other central banks, reached their lowest level since mid-February at minus 50 billion dollars in April.

Economist Fatih Akcelik, while optimistic about tourism receipts this year, is concerned about energy bills, particularly in the last quarter of the year.

In addition, there were very high repayments of Turkish foreign debt at the end of the year, averaging $6.6 billion a month.

That will put the lira under pressure and force the central bank to “aggressively raise interest rates” in the fourth quarter.