World War in Ukraine and interest rate: Turkish inflation flies at 61.14% in March

14:00  04 april  2022
14:00  04 april  2022 Source:   france24.com

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La Turquie connaît une inflation à deux chiffres presque sans discontinuer depuis début 2017 © Ozan Kose Turkey has been experiencing two-digit inflation almost without discontinuous since the beginning of 2017

inflation in Turkey Reached new heights in March, pushed by the war in Ukraine at 61.14% over one year, an increase of 5.46 points in one month, according to official statistics published on Monday.

In February, the increase in consumer prices reached 54.4% in annual sliding, accumulating records related to the collapse of the Turkish book and the soaring energy prices in particular.

The invasion of Ukraine by Russia, two major trading partners in Turkey, which are closely dependent on its energy supplies (gas and oil) and cereals but also its tourism industry, is expensive in the country.

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Observers also call into question the Central Bank's policy that lowered several months during its key rate. Turkish and foreign economists accuse the National Statistical Office (TÜIK) to underestimate more than half the extent of price increases.

Un bureau de change à Ankara, le 23 février 2022 © Adem Altan A currency exchange office in Ankara, February 23, 2022

The Board reported on Monday of more than 99% of the price of transport in one year, more than 70% of those of products food and 69% of equipment.

The Turkish book, which lost 44% of its value against the dollar in 2021, however, remained stable on Monday morning at 14.7 pounds for a dollar (16.2 for a euro), the market has already anticipated inflation in rise.

Turkey has been experiencing two-digit inflation almost no discontinuous since early 2017 but had never experienced such a rise in consumer prices since the arrival of the Justice and Development Party (AKP) of President Erdogan, At the end of 2002.

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Photo fournie le 29 mars 2022 par le service de presse de la présidence turque de Recep Tayyip Erdogan, lors de négociation entre Russes et Ukrainiens à Istanbul © Murat Cetin Muhurdar Photo provided on March 29, 2022 by the press service of the Turkish Presidency of Recep Tayyip Erdogan, during the negotiation between Russians and Ukrainians in Istanbul

- Central Bank and interest rate-

video : War in Ukraine: "Russia is changing strategy" (France 24)

has less than fifteen months of the next presidential election, scheduled in June 2023, the ongoing conflict since On the 24th of February made new increases in consumer prices adding to the already difficult situation of the Turkish economy.

President Recep Tayyip Erdogan, who strives to promote direct negotiations between the two Russian and Ukrainian presidents, last week announced a decline in VAT from 18 to 8% on hygiene products and restoration in order to Relieve the finances of his fellow citizens.

He had already lowered VAT from 8 to 1% on basic food products, without achieving, however, to stop price increases that partially erased the salary increases granted on January 1.

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The Head of State asked the Turkish "patience" Saturday: Recognizing that the war in Ukraine already affected consumer prices, he explained "to battle against those who impose exorbitant prices" and warned that He will be "without pity" with speculators.

"We have to overcome the problems. I ask the nation to be patient and trust us," he said.

But Timothy Ash, Analyst at the BlueAsset Management in London and Specialist recognized by Turkey, attributes the responsibility of this flight of prices to the Central Bank's policy, "the major cause of inflation" according to him, for lowering the Interest rate from 19% to 14% between September and December - it maintained them stable since January.

This "non-orthodox policy" stimulated inflation, he explains, and "the war in Ukraine just aggravated things". "Let's not forget that the target is an inflation at 5%, which the central bank has not achieved since 2011," he says again.

Gold, warns Jason Turey of the London Capital Economics Capital, the rate of inflation "risks climbing a little bit in the coming months." He too deplores that there are "still no sign of the central bank and, above all, President Erdogan indicating that they are ready to change course and raise interest rates".

The Standard & Poor rating agency has awarded last week a negative note to long-term Turkey, "B +" to "BB-".


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