Turkey's inflation rate slows to 38.2%
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The Turkish currency has been under pressure since President Recep Tayyip Erdogan was re-elected on May 28.
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Turkish lira banknotes. (AFP)
Turkey's annual inflation rate decreased to 38.2 percent in June, as per official figures released on Wednesday. Meanwhile, economists cautioned that this could be a low point for the year. The rate slowed from 39.6 percent in May, as per the TUIK state statics agency.
A separate study published by independent economists from the ENAG group who question the official data put the June figure at 108.6 percent, up from 105.2 percent in May.
The official rate has been regularly dropping since reaching a more than two-decade high of 85 percent in October of last year. But economists believe inflation will soon begin growing faster because of the vast spending pledges President Recep Tayyip Erdogan meted out ahead of May's general election.
Turkey has also permitted its closely controlled currency to begin depreciating against the dollar at a rate that is higher than anticipated. "Inflation is likely to rise in July and we think it will end this year at 40-45 percent year-on-year," said Liam Peach, a senior emerging markets economist at Capital Economics as quoted by AFP.
"With the lira's depreciation having been more front-loaded than we had expected and the currency likely to depreciate further in the coming months, inflation looks set to end this year at a higher level than we had thought", Peach added.
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.
