Status: 03.02.2023 10:08 a.m
Turkey’s inflation rate has slowed since its 24-year high in October. According to experts, the reasons for the weakening are falling gas prices and a statistical effect.
In Turkey, the comparatively high level of inflation has eased further, albeit not as significantly as expected. Consumer prices rose by 57.7 percent in January compared to the same month last year, as the state statistics agency announced today in Ankara. Inflation was 64.3 percent in December. Bank economists had expected a decline to 53.8 percent.
Falling gas prices and statistical effect
The fact that inflation rates are now declining has something to do with the calming trend on the international commodity markets. The prices are not quite as high as they were a few months ago. Natural gas prices have fallen back to early 2022 levels after spiking in response to Russia’s invasion of Ukraine.
There are also statistical effects, since inflation rates result from a comparison with the respective prior-year period. If prices are currently rising more slowly than a year ago or if they are even declining, this is clearly reflected in the annual rate.
Record levels since May 2021
Since May 2021, inflation in Turkey has risen continuously to new record levels month after month. At its peak last year, the inflation rate was around 85 percent. According to official information, the increase weakened again for the first time in November.
The background was, on the one hand, the sharp rise in the prices of numerous raw materials and intermediate products as a result of the corona pandemic and the war in Ukraine. On the other hand, inflation was driven by the weak national currency, the lira. A major reason for this, however, is the monetary policy of the Turkish central bank, which, unlike many other central banks, has not acted against inflation by raising interest rates, but rather lowered their key interest rates. Political pressure from the government is considered to be the decisive factor.
Doubts about official figures
Independent experts from the ENAG research group also doubt the official figures. In January, they expect inflation to rise by 121.6 percent year-on-year. They had calculated 137.5 percent for December and even 170.7 percent for November.
Head of state Recep Tayyip Erdogan, who wants to be re-elected in June, had promised a slowdown in inflation. The enormous price increases are largely due to his policy of economic growth. However, the high prices and the population’s loss of purchasing power increasingly became a political problem for Erdogan.