Inflation, food prices

Inflation in Turkey skyrockets up to 15%

One of the main concerns is the rise in the price of food, which grew 18% in January compared to a year ago.

Inflation in Turkey soared in January to almost 15%, according to the latest data published today by the Turkish Statistical Institute (TÜİK), which places the rise in the CPI above analysts’ forecasts and once again draws attention to one of the structural problems suffered by the Turkish economy.

According to data published by TÜİK, prices in Turkey suffered a year-on-year increase of 14.97% compared to the same month of 2020, after already experiencing an increase of 14.6% in December. These data exceed the forecasts of economists, who had projected that inflation would grow in January between 14.68 and 14.75%.

The greatest increase in prices in January was registered in goods and services, where the cost grew by 24.53%; it was followed by furniture and home equipment (23.25%) and in third place transportation (21.43%).

However, the most worrying data refer to the rise in the price of food, which again registered a year-on-year rise of 18%, and 2.5% compared to the previous month. In relation to December, the main drop in prices was in clothing and footwear, where the cost was reduced by 4.37%; on the contrary, the highest month-on-month rise was recorded in medical services and products, which increased by 4.25% compared to December.

Inflation data far from government targets

In the last economic program announced last September, the Turkish government set an inflation target for 2021 of 8%, while for its part the Central Bank of the Turkish Republic (TCMB) forecasts that inflation will be at the end this year at 9.4%.

As soon as he learned the latest data, the new Minister of Economy Lutfi Elvan stressed on Twitter that the inflation figures are far from the objectives set by the Executive, recalling that “sustainable growth is not possible without stability of prices“.

Last week the governor of the Central Bank, Naci Ağbal, reaffirmed the commitment of the institution that he presides to a strict monetary policy to contain inflation, ensuring that even tougher measures will be taken if necessary. In a letter to the government, Ağbal nevertheless maintained the forecast that inflation will fall below 10% by the end of 2021, adding that the current high interest policy of the TCMB should be maintained at least until 2023.

Turkish President Tayyip Erdoğan himself acknowledged on Monday when announcing a series of reforms and the drafting of a new constitution for Turkey that inflation, and especially rising food prices, is the current “biggest threat” to the Turkish economy.