Turkey is grappling with soaring inflation, the highest since 2003, which was the first full year in power of the Justice and Development Party (AKP). In September, year-on-year inflation reached 24.5% in consumer prices and 46% in producer prices. The inflation dynamics indicate that the year-end figures could climb to between 30% and 35% in consumer prices and between 50% and 60% in producer prices.

Consumer inflation had been in single digits since 2003, excluding last year, when it reached 11.9%. The current surge is a new situation that makes wage earners and pensioners relatively poorer as they fail to increase their incomes in line with price increases. The biggest fear of working people, however, is that they could end up with no income at all if the slowing economy spawns a new wave of layoffs. For those indebted to banks, the reasons to worry are even bigger.

Faced with an inflation unseen in the last 15 years, Turks are primarily incensed over the increase in food prices, which owes heavily to the ill-advised policies of the AKP. For years, the AKP encouraged construction-centered growth, neglecting agriculture, as a result of which Turkey is now facing supply shortages and has become a net importer of food.

The main factor fueling inflation, however, is the dramatic depreciation of the Turkish lira or, in other words, the huge increase in foreign exchange prices. At the end of September, the price of the dollar was up 82% from the same period last year. In the first 10 years of AKP rule, the price of the greenback had increased only 27%, which made possible the single-digit inflation rates. With the currency crisis this year, imports became much more expensive and the costs of producers shot up, hence the 46% producer inflation in September.