Turkey’s inflation rate rose to more than 85 percent in October, its highest level in nearly 25 years.
The cost of transportation and food has jumped significantly during the past month compared to what it was during the same month last year.
Meanwhile, the Turkish Central Bank continues its policy of lowering the interest rate, despite the high inflation rates.
Most other countries do the opposite to reduce consumer spending, thus reducing price increases.
Economists say that President Recep Tayyip Erdogan is putting pressure on the central bank to reduce the interest rate to less than 10 percent, in the hope that this will help his candidacy for another five-year term in the presidential elections that will be held next June.
In defiance of traditional economic theories, Erdogan claims that high interest rates are the cause of inflation, not the other way around, and has previously described high interest rates as “the biggest enemy.”
And last month, the Turkish Central Bank cut the interest rate for the third time in a row, from 12 percent to 10.5 percent.
In a speech to the ruling Justice and Development Party (AKP) lawmakers in parliament on Wednesday, Erdogan praised the state of the economy, saying: “Thank God, the wheels of the economy are turning.”
He added, “Our economic model, which we summarized as growth through investment, employment, production, export and a current account surplus, is paying off.”
Many Turks question the reliability of official government statements.
According to a credible monthly study issued by independent economists from the Turkish research institute ENAG, the annual rate of increases in consumer prices was 185.34 percent in October.
The opposition leader, Kemal Kılıçdaroğlu, accused the government of concealing the true figures for inflation while determining the salaries of public sector employees.
Last month, he asked: “Why is the Turkish Statistical Institute hiding the real figure?”
“Because when the real figure is revealed, pensions will be determined accordingly, workers’ wages will be determined accordingly, and civil servants’ salaries will be determined accordingly. If it shows that inflation rates are low, the increase in pensions and salaries will be low,” he said.
Erdogan’s government attributes inflation to external factors, such as the global rise in food and energy prices due to Russia’s invasion of Ukraine.
The central bank is expected to cut interest rates again at its next meeting, to less than 10 percent, Erdogan said.
Liam Beach, chief emerging markets economist at London-based Capital Economics, said the central bank would remain “under pressure” from Erdogan for a more flexible policy.
The central bank said it will cut the interest rate by another 150 basis points at its meeting later this month, but Beach said in a note to clients that “there is a risk of further decline after that, which will add more pressure on the lira to fall further.” .