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Turkey's Inflation Hits 85% in 24 Years Following Rate Cuts

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By Augustine Mbam - - 5 Mins Read

The inflation rate in Turkey has continued to increase, with the price of goods and the cost of living increasing daily. 

According to the Turkish Statistical Institute, the inflation recorded in Turkey is the highest the country has experienced in 24 years. According to the official figures provided by government authorities, the inflation rate continued to increase by 85.5% year-on-year in October. 

The cost of living in the country of more than 85 million people has gone south without any slight decrease for two years. The country's food cost has increased by more than 99% compared to last year. The price of housing and transport in the country has increased by 85% and 117% consecutively. 

The figures even got scarier when the domestic producer price index was analyzed. The domestic producer price index showed a 157.69% increase annually in consumer prices and an increase of about 7.83% every month. 

Because of the high rate of inflation recorded in the country, the country's currency, the lira, has continued to be devalued. Despite the recommendations of professionals and economists, the controversial Turkey president has refused to heed them. 

Turkish President Recep Tayyip Erdogan has been provided recommendations to increase the interest rate, but he has refused. The Turkish president says taking up interest rates will lead to further inflation. 

Instead of increasing interest rates, the Turkish president has been ordering the country's interest rate reduction. The country had slashed its key interest rate by 150 basis points, the third time it was done in October. Despite the increasing interest rate, Turkish President Recep Tayyip Erdogan says that his government is committed to fighting interest rates to single digits in the country. 

"While the whole world ... is struggling with the highest inflation figures of the last 60, 70 years, the wheels of our country’s economy are turning." 

"Many institutions, individuals, and organizations — from the United Nations to many economists — agree with the cause-and-effect relationship we have established between inflation and interest rates,"  Erdogan said. 

Turkey's President Recep Tayyip Erdogan addresses the media after meeting his Croatian counterpart Zoran Milanovic in Zagreb, Croatia, Thursday, Sept. 8, 2022. President Erdogan is on a state visit to Croatia. (AP Photo/Darko Bandic)

He commented on the issue last September, saying that the biggest battle he had faced since he took over the government was interest and that his biggest enemy was" interest."

Turkey Hasn't Recovered From Last Month's Inflation 

Turkey's inflation rate last month was the start of a scary inflation rally. The country has recorded inflation that has hit 83%. It is just about 2% lower than the inflation news today in Turkey. 

Like this month, transport, food, and housing sectors were the most affected. The consumer prices recorded in Turkey were around 3.08% monthly and annually by 83.45%. 

Just like now, in November, Turkish President Recep Tayyip Erdogan refused to control the inflation happening in Turkey the conventional way. In other countries, including the US and the UK, inflation is controlled by increasing interest rates.

 But the Turkish president has chosen an unconventional way of curbing inflation by reducing interest rates. However, the Turkish president's method is not working.