The galloping inflation in Turkey continues unabated. According to the National Statistics Office (TÜIK) in Ankara on Monday, annual inflation in August was 80.21 per cent. Food prices rose by an average of more than 90 per cent year-on-year. A month earlier, the inflation rate had been around 79 per cent.

Opposition parties accuse the government of embellishing the inflation figures and suspect a much higher rate. Independent economic institutes also assume much higher figures. The Istanbul-based inflation research group ENAG even put the year-on-year inflation rate for August at 181.37 per cent. According to the institute, prices for various goods and services alone rose by 23.78 per cent in the previous month. Clothing is also significantly more expensive. For winter coats, for example, men had to pay almost 31 per cent more compared to the previous month.

Turkish lira too weak

The inflation rate in Turkey is driven by several factors. For some time now, the weak national currency, the lira, has been driving up prices considerably, as it makes goods imported into Turkey more expensive. The prices of many raw materials are also rising, not least because of the Russian invasion of Ukraine.

Low interest rates to counteract

In the opinion of many experts, the Turkish central bank is not doing enough to counteract the high inflation. On the contrary, the monetary authorities have been loosening their monetary policy since last summer. According to standard economic doctrine, an increase in interest rates can counteract inflation. Turkish President Recep Tayyip Erdogan, on the other hand, argues that high interest rates cause inflation. The central bank is following Erdogan's line and has so far refrained from raising interest rates. In August, the central bank even lowered the key interest rate from 14 to 13 per cent instead.