Yearly inflation in Turkey rises to new 24-year high of 85%

Turkish President Recep Tayyip Erdogan addresses at an inauguration ceremony of new government buildings in Ankara, Turkey, Wednesday, Oct. 19, 2022. T (AP Photo/Burhan Ozbilici) (ASSOCIATED PRESS)

ANKARA, Turkey (AP) — Annual inflation in Turkey continued to rise in October, official figures showed Thursday, pushing the price of essential goods higher and amplifying a cost-of-living crisis in the country.

Consumer prices rose to 85.51% in October from a year earlier, and by 3.54% from the previous month, the Turkish Statistical Institute said.

The inflation rate was the highest in 24 years.

Experts, however, maintain that inflation is much higher than the official figures. The independent Inflation Research Group on Thursday put the annual rate at 185%.

While the pandemic and Russia’s invasion of Ukraine have stoked inflation around the world, economists believe that inflation in Turkey was fueled by President Recep Tayyip Erdogan’s belief that high borrowing costs lead to higher prices. Traditional economic thinking says that raising rates helps reign in inflation.

Last month, Turkey’s central bank slashed interest rates for the third month in a row — down to 10.5% — in line with Erdogan’s economic views. The Turkish president has signaled more rate cuts to bring the key interest rate to single digits.

In contrast, central banks around the world have been aggressively raising rates to fight soaring inflation.

On Wednesday, Erdogan who stands for reelection in a vote next year, defended his economic policies saying he expected his model — which prioritizes growth, investments, employment and exports — to “bear fruit” and be emulated by others.

“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,” Erdogan said.

“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. “After the new year, you will see the world ... lower interest rates.”