Turkish inflation continues to rise: Experts warn of the next price surge and Erdogan's unconventional economic policy.

Turkish inflation continues to rise: Experts warn of the next price surge and Erdogan's unconventional economic policy.

According to a report from www.capital.de,

Inflation in Turkey continues to be a major problem, despite the central bank's massive interest rate hikes. However, the government has thwarted the central bank's efforts by raising the minimum wage, which could lead to a further rise in prices. Inflation rose by almost 65 percent in December, reaching its highest level in over a year. The surprisingly large increase in the minimum wage, which rose by 49 percent compared to the previous year, could lead to a further price increase of at least 25 to 30 percent. The central bank expects inflation to rise to up to 75 percent by May.

Turkey's homegrown problems are partly due to the unconventional economic policies of President Erdogan, who has imposed loose central bank monetary policy even as inflation has spiraled out of control. Erdogan describes himself as an “interest rate enemy” and has fired several central bank chiefs and finance ministers in order to implement his unorthodox monetary policy. The new head of the central bank, Hafize Gaye Erkan, has already raised key interest rates to 42.5 percent to combat inflation.

According to one analysis, further raising the minimum wage could lead to a significant increase in inflation and difficult economic conditions. Companies are likely to try to offset higher labor costs through higher prices, which could lead to further inflation. President Erdogan's unorthodox economic policies and persistent inflation could lead to an unstable economic situation in Turkey.