Turkey‘s inflation has soared to a new record, official data showed Monday, as analysts see an impact from Russia’s invasion of Ukraine and President Recep Tayyip Erdogan’s unorthodox interest rate policy.
Exacerbating a cost of living crisis, consumer prices accelerated to 61.14 percent at an annual rate, up from 54.4 percent in February, according to the statistics agency.
The weakening lira and runaway inflation have become major sources of public discontent in Turkey as President Recep Tayyip Erdogan faces an election next year. Turkey has recorded double digit inflation since early 2017 but the latest figure is the highest since the ruling Justice and Development Party (AKP) came to power in 2002.
The currency was stable following the latest inflation data, trading at 14.7 lira against the dollar and 16.2 lira against euro.
The war in Turkey’s Black Sea neighbourhood has had a major impact on the country as Russia is a key supplier of energy while Ukraine ships wheat. Turkish tourism industry also mainly relies on Russian tourists.
On Friday, S&P global rating agency kept a negative outlook on Turkey and cut its credit rating.
“The fallout of the Russia-Ukraine military conflict, including rising food and energy prices, will further weaken Turkey’s already tenuous balance of payments and exacerbate inflation,” it said. The biggest price increases in March were in transportation and food prices, according to the statistics agency.
While countries around the world are facing rising inflation as energy prices have soared while economies emerge Covid restrictions, Turkey’s problems have also been affected by Erdogan’s unorthodox economic approach.
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