The annual inflation rate in Turkey has surged to a 20-year high of 48.7%, state data revealed on Tuesday, despite months of assurances by President Recep Tayyip Erdogan that the soaring figures were just temporary and that his government could ease the pain on Turks weighed down by rising living costs.
Prices of consumer goods spiked 11.1% in January compared to the previous month, according to the Turkish Statistical Institute, higher than analysts’ predictions, which spanned between 9% and 10%.
The Turkish lira lost 44% of its value in 2021 in a rout driven by Erdogan’s refusal to raise rates as inflation consistently climbed. The currency’s turbulence has hit Turks hard, as the value of their salaries dropped and costs of goods and energy dramatically increased. The president has prioritized credit and exports, while consistently arguing — against all economic orthodoxy — that raising rates actually worsens inflation rather than taming it.
Turkey’s central bank has cut interest rates by 500 basis points since September to 14%.
“The results of Erdogan’s failed monetary policy experiment,” Timothy Ash, senior emerging markets strategist at BlueBay Asset Management, wrote in a note following the inflation report.
“Hard to see how the CBRT [Turkish central bank] can cut inflation when it’s unable to hike rates and Erdogan is going to be focused on trying to get credit growth up again to boost his popularity ahead of elections.”
Turkish Finance Minister Nureddin Nebati told the Nikkei news agency Wednesday that he predicted inflation will stay below 50%, peaking in April.
Read More: Turkey’s inflation hits nearly 50%, highest in two decades