Turkey’s official inflation rate hit a 23-year high last month as President Recep Tayyip Erdoğan’s unorthodox strategy to manage the country’s $790 billion economy continued to backfire. function.
The consumer price index rose 73.5% year-on-year in May, according to data from the country’s statistics agency, the highest level since October 1998 when Turkey reeling from a period ravaged by unstable coalition governments and economic turmoil.
Food prices, which have increasingly become a source of discontent among the Turkish public, have increased by 91.6% year-on-year.
Erdoğan, a staunch opponent of high interest rates, ordered the central bank to repeatedly cut borrowing costs in the last months of last year despite rising inflation.
The president announced he was embarking on a new economic model that would harness the cheap lira and boom in exports to reduce inflation by eliminating the country’s lingering trade deficit.
Even before the war in Ukraine, critics described the plan as a high-risk economic “experiment” that threatened to cause a collapse in the value of the Turkish lira and lead to inflation increased.
Russian President Vladimir Putin’s invasion of Ukraine has increased the challenges, as rising global energy prices have pushed up the cost of Turkey’s already large energy import bill and further fueled inflation. .
While Turkey has enjoyed strong growth thanks to its super-loose monetary policy, the rising cost of living has contributed to eroding popular support for Erdoğan in the past. Elections scheduled for June next year.
Last month, Erdoğan said those who draw the link between interest rates and inflation are either “illiterate or traitors”.