ANKARA — Annual inflation in Turkey hit 58,94% in August, with consumer prices increasing 9.09% from the previous month, according to official data released on Monday.
The Turkish Statistical Institute (TUIK) reported that annual inflation jumped by 59% compared to the same period last year.
Following the release of the data, Turkey’s Finance and Treasury Minister Mehmet Simsek said his country was in an economic transition period. Simsek was appointed at the helm of the country’s economy as part of Ankara’s shift toward a more conventional economic policy following Turkish President Recep Tayyip Erdogan’s reelection in May as the country is facing one of its worst economic crises.
“We know that combating inflation will take time. We are in a transition period. We will do whatever necessary (monetary tightening, credit policy and income policies) to take control of inflation and lower it,” Simsek wrote on Twitter. “We are absolutely determined to fight inflation.”
Enflasyonla mücadelenin biraz zaman alacağını biliyoruz. Geçiş dönemindeyiz. Enflasyonu kontrol altına almak ve daha sonra düşürmek için ne gerekiyorsa (parasal sıkılaşma, kredi politikası ve gelirler politikaları) yapacağız. Sonuçta sabretmemize değecek.
Enflasyonla mücadelede… https://t.co/aag0TfjihE
— Mehmet Simsek (@memetsimsek) September 4, 2023
The data released Monday showed transportation to be the main driver of the increase in monthly consumer prices, rising 16.61% partly due to consecutive fuel hikes.
Household equipment and food prices were the second and third driver of the surge in monthly prices in August, rising by more than 9% and 8%, respectively, the data showed.
Turkey’s year-on-year inflation began mounting again in July following an eight-month downtrend. The country’s annual inflation peaked to a 24-year high of 85.5% in October amid a swift slump of the Turkish lira, largely due to Erdogan’s unconventional economic policy that is underpinned by high interest rates causing high inflation.
Under Erdogan’s influence, the country’s previous Central Bank management had cut interest rates as low as 8.5% over the past two years, in sharp contrast to the country's G-20 and regional peers that raised their policy rates to keep inflation at bay and safeguard their currencies in a bid to weather the global impact of Russia’s invasion of Ukraine and the coronavirus pandemic.
As part of the policy U-turn following the elections, the bank raised the country’s interest rates to 25% in consecutive hikes under its new Gov. Gaye Erkan, a mainstream economist and a former US banking executive who took over the office in June.