According to the most recent official data, Turkey’s inflation rate is the highest it has been in twenty-four years.
In June, the annual rate of inflation, or the rate at which prices are rising, reached 78.62 percent, which was slightly higher than anticipated.
The Ukraine conflict exacerbated price increases in the housing and transportation sectors.
Since last year, when the Turkish president lowered interest rates to stimulate the economy, inflation has skyrocketed.
Typically, nations would increase interest rates to combat inflation. President Recep Tayyip Erdogan, however, has referred to interest rates as “the mother and father of all evil” and has resorted to unorthodox measures, such as intervening in foreign exchange markets, to reduce prices.
The decline in the value of the Turkish lira, as a result of last year’s reduction in interest rates from 19 percent to 14 percent, has increased the cost of importing foreign-made products.
According to the most recent inflation data, transportation costs increased by 123 percent over the past year.
Food and non-alcoholic beverages followed closely behind with price increases of 94%, while furnishings and household equipment increased by 81%.
Since September 1998, when annual inflation reached 80.4% and Turkey fought to end a decade of chronically high inflation, the overall inflation rate was the highest it has been since September 1998.
As Turkey’s inflation continues to smolder, the country’s economy must also contend with the effects of a falling currency value. In the past year, the Turkish lira has lost nearly half of its value. This indicates that consumer spending power is declining as the price of goods and services continues to soar.
Despite reaching a 24-year high in June, economists anticipated that the inflation rate would continue to rise. This is the second consecutive month that official data have fallen short of expectations, and this continues to raise questions about the reliability of official data from the Turkish statistics agency. Adding fuel to the fire, the head of the department of price statistics resigned citing health concerns before the release of May’s inflation data.
While living and working conditions in Turkey are difficult, favorable exchange rates are luring international tourists to the country for summer vacations. However, fewer Turkish tourists are visiting than in the past, and to afford it, they are staying for fewer days and spreading out their payments over 10-12 months.
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The price increase is challenging for businesses.
Volkan Yorulmaz, the general manager of Kemer Holiday Club in Antalya, stated, “I’ve never experienced a season quite like this before.” “My expenses vary from day to day, so I am unable to create a budget. The concept of all-inclusive is no longer viable.
“Without our Russian and Ukrainian guests, the beginning of the season was a bit challenging.
“Vacationing Turks are attempting to enter the country. To make it affordable, they use credit cards, pay in installments, or shorten their planned vacations.”
