Annual inflation in Turkey in July rose to 79.6% – the highest since 1998. The announcement was made by the Turkish Institute of Statistics on Wednesday, August 3rd. As a result of July, the monthly price increase was 2.37%.

Prices in the transport sector are the fastest growing in the country – over the year they increased 119.11%, while food and beverage prices rose 94.65%, analysts say. Reuters analysts had forecast a year-on-year rise in consumer prices at the level of 80.5 percent, The Financial Times newspaper had expected growth in July of 80.1 percent.

Annual inflation in the country is at its highest level since September 1998 – then it reached 80.4%. In the wake of this crisis, Recep Tayyip Erdogan, who now holds the post of President of Turkey, came to power in 2003, recalls The Guardian.

Inflation rises as the lira weakens

Inflation in Turkey started to rise in autumn 2021, when the lira dropped sharply after the country’s central bank cut the rate to 14%, Reuters notes. This year, prices were further stimulated by the economic fallout from the Russian invasion of Ukraine and the continuing decline of the lira. The currency weakened by 44% against the dollar in 2021 and is down another 27% this year.

Analysts cite Erdogan’s policy of lowering interest rates to spur economic growth, which began in 2018, as one of the reasons for rising prices. This was done against the advice of the head of the Central Bank, which led to the lira falling to an all-time low and increased spending in a country dependent on imports of materials and energy, writes The Guardian. The president has since fired three central bankers.

Economists doubt the veracity of inflation numbers

Some analysts and opposition in the country believe the true inflation rate is higher than official figures, write the FT and Reuters. The Istanbul Chamber of Commerce reported in June that annual inflation in Turkey’s largest city had reached 94%. A report by the group of Turkish independent economists ENAG showed that consumer prices rose 175 percent in June compared to last year, The Guardian reported.