Turkey’s inflation climbed to its highest level since 1998, hitting an annual 73.5% in May, official data showed Friday, an issue dogging President Recep Tayyip Erdogan ahead of elections next year.
Critics have blamed the country’s economic woes on Erdogan’s unorthodox economic policy of pushing for lower interest rates to combat price rises.
The central bank refused again last week to raise its main rate, keeping it at 14 percent.
Soaring food and energy prices pushed inflation even higher last month.
Transport prices jumped by 107.6 percent in May while food was up 91.6 percent.
Russia’s invasion of Ukraine and the coronavirus pandemic have exacerbated the energy price spikes and production bottlenecks.
With elections looming in June 2023, the opposition and many economists have accused the national statistics agency of deliberately underestimating the magnitude of inflation.
The Inflation Research Group, made up of independent Turkish economists, said Friday that inflation actually accelerated by a whopping 160.8 percent, more than twice the official figure.
The statistics agency did not publish the detailed list of prices per product that serves as a basis for its calculations, a move that raised fresh doubts about the accuracy of official figures.
“According to my own observations, the gap between reality and what is measured has widened this month, with the goal of hiding impoverishment,” economist Murat Kubilay wrote on Twitter.
Risk of ‘systemic crisis’
The country’s currency, meanwhile, has lost nearly 48 percent in value over the past year. The collapse of the lira has pushed up the cost of energy imports and foreign investors are now turning away from the once-promising emerging market.
Rumours of a military intervention in northern Syria further hit the value of the Turkish lira, which was at 16.49 to the dollar on Friday. The currency has lost nearly 48 percent in value over the past year.
Erdogan’s government has responded by using state banks to buy up liras in a bid to cut the currency’s losses.
Turkey has cut taxes on some goods and offered subsidies for electricity bills for vulnerable households but even this has failed to stem inflation.
There has also been speculation that the central bank sells dollars to stem the lira’s slide.
“If we don’t see change in policy the country faces a systemic economic crisis,” Timothy Ash, emerging markets strategist at BlueBay Asset Management, said on Twitter.