Hyperinflation in Turkey continues

The inflation rate in Türkiye remains at an extremely high level. Food prices in particular also became more expensive in March. The latest intervention by the Turkish central bank has not yet had any effect.

People in Turkey continue to have to cope with a rapid increase in prices. Consumer prices also rose significantly in March, and price inflation even increased again. Consumer prices rose by 68.5 percent year-on-year, the national statistics office announced today in Ankara. This exceeded the February value of 67.1 percent.

At least there was a glimmer of hope from the observers’ point of view: economists had expected an even greater increase in inflation to 69.1 percent.

Gastronomy, food, health and education

From February to March alone – within one month – goods and services in Turkey became 3.2 percent more expensive. Prices rose particularly sharply in the catering industry. Here, the statistics office reported almost a doubling year-on-year.

The increase in food prices was also above average in March: they rose by 70.4 percent year-on-year. There was also a sharp increase in healthcare costs at around 80 percent and in education at 104 percent.

Turkish lira continues to weaken

The main driver of inflation remains the weak national currency, the lira, which makes imported goods and services even more expensive due to exchange rates. In the morning, one US dollar was paid 32.03 lira and one euro was 34.48 lira.

Since the beginning of the year, the lira has depreciated by around six percent against the euro. Recently, however, the decline in the lira’s price did not continue. The Turkish national currency has lost considerable value in recent years. Many imports that have to be paid for in foreign currencies on the world markets are becoming more expensive due to the weakening national currency.

Experts say waning Inflation pressure in advance

Rising key interest rates can make a currency more attractive for investors again. The Turkish central bank has therefore recently surprisingly tightened its monetary policy. 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 of monthly inflation is observed,” it said. 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 sharp rise in the cost of living is seen as one reason for the defeat of President Recep Tayyip Erdogan’s AKP in local elections last weekend. The opposition was able to prevail in numerous large cities – including Istanbul.