2023-12-04 12:24:10
Inflation reached almost 62% year-on-year in November in Turkey, according to official data published on Monday.
(AFP / OZAN KOSE)
The rise in consumer prices, fueled in particular by the depreciation of the Turkish lira, climbed in November to 61.98% year-on-year, while it had reached 61.36% in October.
However, it fell slightly from 3.43% to 3.28% over one month in November.
Although high, the official figures are disputed by independent economists at the Inflation Research Group (Enag), who calculate the rise in consumer prices at 129.27% year-on-year in November.
Since the May elections and the reappointment of President Erdogan, the new team at the head of the Central Bank and the Ministry of the Economy has raised the key rate from 8.5 to 40% in an attempt to reduce the ‘inflation.
Mr. Erdogan was re-elected last May, pledging during his campaign to never allow the central bank to raise its key rate as long as he was president.
However, he changed course, appointing a new team of respected economists, trained on Wall Street and in the private sector, responsible for getting Turkey out of the crisis.
According to analysts, a final increase in the key rate of 2.5% might take place at the next central bank meeting on December 21.
The key rate might then remain stable during 2024.
-Reset will take time-
According to official data, rising borrowing costs have started to slow consumption – a key objective of the central bank.
Turkey’s GDP grew by only 0.3% between July and September. It increased by 3.3% between April and June.
“The central bank will welcome these figures as evidence that demand is cooling and inflationary pressures continue to ease,” said Liam Peach of Capital Economics.
“However, bringing inflation back to much lower levels will require monetary policy to remain tight for a prolonged period and we expect the central bank to leave interest rates unchanged throughout 2024.” , he added.
Ratings agency Standard & Poor revised Turkey’s long-term rating from stable to positive in November.
“Inflation appears to have peaked,” said the rating agency.
But she also warned that “the policy reset will take at least two years to bring inflation under control.”
Analysts blame President Erdogan for triggering the inflationary spiral by forcing the nominally independent central bank to cut the policy rate well below rising prices.
The official annual inflation rate had peaked at 85.51% in October 2022.
Caught in a spiral of devaluation and inflation, Turkey has experienced double-digit inflation continuously since the end of 2019, making the cost of living difficult to bear for many families.
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