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Erdoğan at an appearance after losing local elections on Easter weekend
Photo: Adem Altan / AFP
Inflation in Turkey rose to its highest level in more than a year in March. Consumer prices rose by an average of 68.5 percent compared to the same month last year, as the statistics office announced on Wednesday.
This is the highest value since the end of 2022. In February, the inflation rate was still around 67.1 percent. From February to March alone, goods and services rose in price by almost 3.2 percent. The Turks had to dig deeper into their pockets, especially for education, hotels, cafés and restaurants as well as for health, transport and food.
The central bank's policy reversal has so far been unsuccessful
The sharp rise in the cost of living is seen as one reason for the defeat of President Recep Tayyip Erdoğan's AKP in local elections last weekend. The opposition was able to prevail in numerous major cities – including Istanbul.
The Turkish central bank has recently surprisingly tightened its monetary policy in view of the stubbornly high inflation. The key interest rate was raised from 45 to 50 percent in March. The move was justified with worsening inflation prospects. "The tight monetary policy stance will be maintained until a significant and sustained decline in the underlying trend in monthly inflation is observed," it said. Inflation expectations would also have to fall. Economists surveyed by the Reuters news agency assume that the inflation rate will fall to just under 44 percent by the end of the year.
The Turkish national currency, the lira, has lost considerable value in recent years. This is considered to be one reason for the high inflation. Many imports that have to be paid for in foreign currencies on the world markets are becoming more expensive due to the weakening lira. Rising key interest rates can make a currency more attractive for investors again and are currently also being used by other central banks to reduce inflation - albeit at a significantly lower level.
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