Inflation in Turkey surges to 47.83 percent in July

By Al Mayadeen English
Source: Agencies
3 Aug 2023 12:50
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The latest inflation rate aligns with previous predictions and comes after the central bank adjusted its year-end forecast to 58 percent from 22.3 percent.

Customers walk in The Spice Bazaar, Eminonu District in İstanbul on Sept. 6, 2022 (AFP)

In July, Turkey's annual inflation surged to 47.83 percent, a significant increase from the previous rate of 38.2 percent, as per official data released on Thursday.

This new figure aligns with earlier expectations and follows the central bank's revision of its year-end forecast to 58 percent from 22.3 percent. Independent economists have long expressed doubts about the official inflation rate.

After reaching a more than two-decade high of 85 percent in October of the previous year, the official rate had been gradually declining. However, both the central bank and economists predicted an upward trend from July.

The new central bank governor, Hafize Gaye Erkan, explained during her debut press conference that inflation would rise temporarily due to the increasing exchange rate of the lira and fiscal measures. Under her leadership, the central bank raised interest rates twice, from 8.5 percent to 15 percent.

It is worth noting that the lira lost more than 23% of its value versus the dollar shortly after the Presidential elections.

Reportedly, Turkish President Recep Tayyip Erdogan began curring interest rates to keep investment cheaper and growth more possible, but after inflation started running wild by hitting an estimated 85% annual rate late last year, the president was keen on keeping interest rates low to attract more growth. Unfortunately, that came at the price of the Turkish lira which plummeted gravely.