The cost of living has exploded in Turkey, which is experiencing a major economic crisis a few months before the presidential elections. Inflation has thus reached a 25-year high, while the Turkish lira (TRY) continues to fall. Update on the situation.
Inflation reaches 85% in Turkey
According to official data published for the month of October, inflation has reached 85% over the last twelve months in Turkey. This is an increase of 3.5% from the previous month, and it is the seventeenth consecutive month of increases. It has been nearly 25 years since the country had seen such a rise in the cost of living.
Specifically, food prices have exploded by +99% compared to last yearhousing took +85% and the transport sector also exploded, with +117%.
In parallel, the course of the Turkish lira (TRY) has continued to falland the trend has only been confirmed in recent months:
The long fall in the price of the Turkish lira (TRY)
To put this into perspective, we can look at salaries. Half of Turkish employees earn the equivalent of less than $300 per month. The situation is therefore particularly worrying.
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Erdoğan refuses to raise interest rates
Turkish President Recep Tayyip Erdoğan is currently facing public criticism because he refuses to raise the interest rates of the Central Bank. According to him, this would be even more harmful to the country’s economy. Several economists are pointing the finger at an error, while other central banks – including the Federal Reserve yesterday – have gradually raised their rates in order to contain inflation.
In addition, several experts believe that the figures would be wrong, with inflation which could actually reach a much higher rate. An independent research group said today that real inflation would reach 185% :
ENAGrup Tüketici Fiyat Endeksi (E-TÜFE) Ekim ayında %7.18 arttı.
E-TÜFE’nin its 12 aylık artışı %185.34 gerçekleşti.
— ENAG (@ENAGRUP) November 3, 2022
If the Central Bank of Turkey continues not to raise rates, it is likely that inflation will continue to rise. This is the salient point of fiat currencies, which unlike cryptocurrencies are controlled by a central bodywhose decisions (or non-decisions) weigh heavily on the daily lives of citizens.
👉 On the same subject – Euro zone: record inflation, but France is the least affected country
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Source: AFP, TradingView (TRY/USD)
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