Analysis of inflation developments in Turkey: Experts expect continued high inflation rates

Analysis of inflation developments in Turkey: Experts expect continued high inflation rates

According to a report by www.faz.net, inflation in Turkey rose again in November. Consumer prices rose by almost 62 percent compared to the same month last year. Despite a slight increase in the rate, this is seen as a sign of easing in prices.

The official inflation rate peaked at 85 percent in October last year and then fell again. However, it picked up again this year, mainly due to the massive spending programs announced by re-elected President Recep Tayyip Erdogan.

After the election, the Turkish central bank changed its monetary policy course and increased key interest rates to 40 percent. This move was accompanied by the appointment of a former Wall Street banker as central bank chief and a liberal economist as finance minister. Nevertheless, despite the increase, the interest rate is still well below the inflation rate, meaning that the economically crucial real interest rate remains negative.

Experts assume that the inflation rate in Turkey will remain high for a while. The central bank expects a peak of 70 to 75 percent next May, while independent experts expect drastically higher inflation rates.

The local currency, the lira, has also barely benefited from the central bank's stricter monetary policy and is still near historic lows against the US dollar and euro. This makes many imports into Turkey more expensive and contributes to further fueling inflation.

These developments show that despite tight monetary policy, inflation remains a serious problem in Turkey, weighing on the economy and the population. The negative impact on the market and the financial industry is obvious, with real negative interest rates and high inflation weighing on investors and consumers alike. It remains to be seen how the central bank and the government in Turkey will continue to respond to this challenge.