Turkey's August Inflation Rate at 80%... Claims of "Actual Rate at 180%"

On the 18th of last month (local time), a man is sitting on a chair amid people passing by at an Egyptian spice market in Istanbul, Turkey. [Image source=Yonhap News]

Turkey's consumer prices in August surged more than 80% compared to the same month last year.

The local statistics agency announced on the 5th (local time) that the consumer price inflation rate for August was recorded at 80.2%. This is 0.6 percentage points higher than the previous month's inflation rate of 79.6%.

However, experts and some private research institutions have analyzed that Turkey's actual inflation rate is much higher than the official statistics, exceeding 180%.

Turkey has been suffering from high inflation recently due to soaring energy and grain prices caused by the spread of COVID-19 and Russia's invasion of Ukraine.

In particular, unlike Western central banks that are raising interest rates to respond to inflationary pressures, Turkey has maintained a policy of lowering its benchmark interest rate, further fueling inflation.

The Central Bank of Turkey kept the benchmark interest rate at 14% for seven months this year but suddenly cut it to 13% last month, a move foreign media described as an unexpected and shocking measure.

At the time, the central bank stated that economic stimulus was important to maintain growth momentum, but this went against the global trend of monetary tightening, prompting some in the financial sector to call it "another foolish move."

The Turkish government recently raised its inflation forecast for this year from the previous 9.8% to 65% in its newly announced three-year economic plan. Although it expects inflation to ease to around 25% next year, it is unlikely to fall below 10% by 2025.