Turkey's official inflation rate reached a 24-year high as the government's unconventional approach to controlling the country's $767 billion economy backfired. According to Turkstat (Turkish Statistical Institute), the consumer price index (CPI) increased 73.5% in the 12 months through May 2022 compared to roughly 70% in April. The lira fell 0.25% versus the dollar to 16.505, its lowest level since December 2021.
CPI Index down 73.5%
Turkey's consumer price index has risen sharply since last autumn, as the Turkish currency has fallen since the central bank began a 500-basis-point easing cycle in September 2021. Despite tax cuts on basic products and government subsidies for utility bills, consumer prices have risen, exerting strain on household finances. The current CPI is higher than the previous high of 73.2% in 2002 and is the highest since October 1998, when annual inflation reached 76.6%. However, the increase was smaller than that in recent months, indicating that price pressure could be easing. The conflict between Russia and Ukraine, which led to an increase in the prices of oil & gas, and grains, only exacerbated the situation in Turkey, which is heavily reliant on imports.
Sectorial Impact:
According to Turkstat, with the largest annual increase, the prices in transportation industry increased 107.6%, followed by food and nonalcoholic beverages with 91.6%. According to the data, a core index that excludes the influence of volatile commodities such as food and energy, reached 56%. In May, the domestic producer price index increased 8.76% month-over-month, bringing the yearly increase to 132.16%.
Outlook:
Monthly inflation readings are moving downward, which is likely to be a positive indication, according to Turkey's Treasury and Finance Ministry. According to the government, inflation would decrease under its new economic plan, which stresses low interest rates in order to stimulate production and exports for achieving current account surplus. Because of increasing commodity prices and supply concerns, the Central Bank of the Republic of Turkey (CBRT) changed its inflation predictions for this year and the next. The central bank also estimates that inflation would reach a peak of nearly 70% by the end of June and fall to 42.8% by the end of the year.
Don’t wait - discover a universe of connected data & insights with your next search. Browse over 28M data points across 22 industries.
Access more premium companies when you subscribe to Explorer