Annual inflation in Turkey in January reached its highest level since April 2002, according to official data released on Thursday, after the exchange rate dissolved the purchasing power of the country's citizens.
According to the French News Agency, consumer prices rose sharply, higher than expected, by 48.7% compared to the same period in January last year, up from 36.1% in December. , according to the Statistical Service of Turkey.
The figures came just days after President Recep Tayyip Erdogan ousted the head of the Statistics Service for the fourth time since 2019.
Turkish media reported that Erdogan was unhappy with the agency's data showing that inflation had reached its highest level since his party came to power two decades ago, paving the way for his re-election in 2023.
Former Chief of Staff Erdal Dincer has only served 10 months in office. He was replaced by Erhan Cetinkaya, who previously served as vice president of Turkey's banking supervisory body.
Independent data collected by Turkish economists show that the annual inflation rate increased by more than 110% in January. Erdogan is strongly opposed to raising interest rates, which he believes are causing inflation, which is the exact opposite of the conventional economic view. On Monday, he acknowledged that the Turks would need to “lift the weight” of inflation for “some time”.
“With God's help, we have entered a period where each month is better than the last,” he added.
Turkey has been suffering from systematically high inflation for years, experiencing two exchange rate crises since 2018. The second time was last year after Erdogan orchestrated sharp cuts in interest rates, pushing them well below the rate at which prices were rising, which limited the purchasing power of the Turks and the value of their savings.
Turkish Finance Minister Nuredin Nebati told Nikkey Asia in an interview published on Thursday that inflation would peak in April before falling to single-digit levels by the June 2023 general election.
The central bank revised its inflation forecast until the end of 2022 last month to 23.2% from 11.8%, although most economists consider this estimate to be extremely optimistic.
“We expect inflation to be around 45-50% for the most part this year and unless there is a new collapse of the pound, it will only fall in the last months of 2022,” said Capital Economics analyst Jason Tavey.
The government hopes inflation will fall after pressures subside, including wage increases in January and rising household and business energy bills, and when new currency support measures come into force.