Turkey has abandoned the fight to control inflation
In my opinion, rather than expressing this economic policy with fancy phrases, having the government be honest with its citizens about what we are up against works in their favor.
What I have written so far may seem confusing. On the one hand the government is trying to reduce inflation, on the other hand it is trying to increase exports, and on the other hand it has growth targets and so on.
He tries to do all these things against the basic rules of economics.
As we know, interest rates are one of President Erdogan’s greatest obsessions. At a press conference in January, Nebati voiced this. “You will talk about central bank independence, that doesn’t exist,” he said. “Interest rates won’t go up anymore, forget it.”
Afterwards, he again declared that Turkey would no longer use this most effective tool in the fight against inflation.
All this shows how incoherent Turkey’s economic policies are. It must be said here: Turkey cannot reduce inflation and increase people’s well-being with these policies or economic actors.
Let’s look at inflation data and explain the situation in Turkey in terms of price stability.
In May, Turkey’s consumer price index (CPI) was 73.5% higher than the same month last year. The largest increase in consumer prices occurred in transportation – 107 percent.
The rapid rise in oil prices around the world and the depreciation of the Turkish lira were factors in this increase. The annual increase in food prices was 91%.
These two price groups have played an important role in driving up inflation. But while the CPI plays an important role for many citizens, it is also necessary to take a look at the Producer Price Index to understand future inflation trends.