Hyperinflation continues in Türkiye

Residents of Türkiye continue to face rapidly rising prices. Consumer prices also increased significantly in March and even price inflation increased again. Consumer prices increased by 68.5 percent year-on-year, the national statistics office in Ankara announced today. This exceeded February’s value of 67.1 percent.

At least from the point of view of observers there was a ray of hope: economists expected an even greater rise in inflation, to 69.1 percent.

Gastronomy, food, health and education.

From February to March alone – in one month – goods and services in Turkey became more expensive by 3.2 percent. Prices increased especially in the restaurant sector. In this case, the statistics office reported that they almost doubled year after year.

Food price growth was also above average in March, rising 70.4 percent year-on-year. There was also a sharp increase in health care costs, of about 80 percent, and in education, of 104 percent.

Turkish lira continues to weaken

The main driver of inflation remains the weak national currency, the lira, which makes imported goods and services more expensive due to exchange rates. In the morning, one US dollar was equivalent to 32.03 lira and one euro to 34.48 lira.

Since the beginning of the year, the lira has depreciated around six percent against the euro. However, recently the decline in the price of the lira did not continue. The Turkish national currency has lost value considerably in recent years. Many imports that must be paid for in foreign currency on world markets are becoming more expensive due to the weakening of the national currency.

Experts say it is declining inflation pressure in advance

Rising key interest rates can make a currency more attractive to investors again. Therefore, the Turkish central bank has recently surprisingly tightened its monetary policy. The key interest rate was raised from 45 percent to 50 percent in March. The measure was justified by the worsening inflation outlook.

“The tight monetary policy stance will be maintained until a significant and sustained decline in the underlying monthly inflation trend is observed,” it said. Economists polled by Reuters news agency expect the inflation rate to fall to just under 44 percent by the end of the year.

The sharp rise in the cost of living is seen as one of the reasons for the defeat of President Recep Tayyip Erdogan’s AKP in local elections last weekend. The opposition managed to prevail in numerous large cities, including Istanbul.