Turkish inflation peaked

13:33 04 July Kyiv, Ukraine

Inflation in Turkey was 78.6% in June in annual terms - the highest since 1998, which is due, in particular, to Erdogan's policy of low Central Bank rates.

It is reported by the Financial Times.

It is noted that the figure was slightly lower than the consensus forecast of analysts at 80%.

Erdogan, who rejects the conventional wisdom of economists that raising the discount rate curbs inflation, has ordered the central bank to keep its base borrowing rate well below the rate of inflation.

As a result, the Turkish lira has lost 48% of its value against the dollar in the last 12 months.. The depreciation has been the main driver of price increases in a country dependent on imports, especially energy. The trend worsened after the full-scale invasion of the Russian Federation into Ukraine, which led to a sharp increase in energy prices.

Investment bank Goldman Sachs recently raised its year-end inflation forecast for Turkey from 65% to 75%.. They warned that the latest increase in the minimum wage could lead to a price-wage spiral. A few days earlier, the Turkish authorities announced a 30% increase in the minimum wage, six months after raising the base wage rate by 50%.