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Turkey experiences record-breaking inflation

Erdogan’s country is experiencing record-breaking inflation (79.6%), a figure it has not experienced in 24 years.

Underlying Turkey’s record-breaking inflation are multiple factors, but before going into detail, it must be said that the country has always had above-average inflation, both of Asian and European countries. 

Turkey: the history of inflation

Turkey suffers from a high level of inflation

From 2020 onward, the country experienced a steepening of inflation, rising from 6.37% to 10.41% in 2021, and then finally exploding from January this year when it stood at 45.72%. 

The figure is exorbitant, but certainly nothing like the hyperinflation in El Salvador, the home of Bitcoin, which exceeds 100%.

In July, the CPI rose to 79.60%, the highest since 1998, while the monthly rate came in at 2.37%, as reported by the Turkish Statistical Institute (TSI).

Transportation costs, both rail and road, increased and added to air and port costs reach an increase of 119.1%. As pointed out, it is precisely transportation that is one of the four main product groups whose prices have increased faster than the consumer price index. 

The other groups that appear, transportation in this special ranking, are food and non-alcoholic beverages, a sign that the basic necessities belonging to the basket referred to by the CPI are the ones to suffer the most from inflation. 

On average, this small circle of primary groups experienced increases of 94.65%, followed closely by furniture and household goods (88.35%) and tobacco and alcoholic beverages (82.66%).

The data confirm the government’s cautious optimism that, despite the evidence, believes that there will soon be a turnaround and return to more manageable values. 

On a monthly basis, although the transport sector is the most inflated, it is also the one showing the first downward trend, with inflation falling in the past month by 0.85%. 

The main causes of hyperinflation

According to Reuters, but also according to the Turkish IST itself, the causes of the inflation boom after 2021 are to be found in the rapid depreciation of the Turkish lira and the impact that the war between Russia and Ukraine had on the trade relations the country was undertaking with them. 

Turkey has always been considered like Ukraine, a bridge between two continents, or rather, in the case of Istanbul, between three continents, Europe, Asia and Africa. 

The Turkish Central Bank speaks positively about the future by making calming estimates at the levels of early last year for 2023, which is already upon us by predicting that the inflation figure will return to 42.8% by the end of the next six months. 

George Michael Belardinelli
George Michael Belardinelli
A former corporate manager at Carifac Spa and later at Veneto Banca Scpa, blogger and Rhumière, over the years he has become passionate about philosophy and the opportunities that innovation and the media make available to us, in particular the metaverse and augmented reality