Turkey’s Central Bank released its outlook on inflation today.
The Central Bank predicted that inflation will reach 42.8% by the end of 2022, 12.9% by the end of 2023 and 8.2% by the end of 2024. The bank identified the following factors as contributing to inflation:
- rising energy costs due to the “ongoing armed conflict,” likely a reference to the war in Ukraine
- increases in food and agricultural good prices
- supply chain disruptions
Turkey gets much of its gas from Russia and wheat from both Russia and Ukraine. The Russian invasion has led to soaring commodity prices across the world.
Why it matters: The projections are a markedly more dire outlook from the monetary institution. The Central Bank’s previous projections for inflation were 23.2% for 2022 and 8.2% for 2023, according to the official Anadolu Agency.
Inflation is currently running rampant in Turkey, hitting 61% in March. Rising commodity prices from the Russian invasion of Ukraine are a factor, but inflation was high well before the war.
Turkish President Recep Tayyip Erdogan has long defied conventional economics by insisting that higher interest rates lead to higher inflation. He has refused to raise rates as a result.
Know more: The Turkish government is presently receiving more gas from the United States to mitigate the effects of the war in Ukraine.