ISTANBUL—Yearly inflation in Turkey hit 61.14 percent on Monday, climbing to a new 20-year high and deepening a cost of living crisis for many households.
The Turkish Statistical Institute said consumer prices rose by 5.46 percent in March compared with the previous month. Yearly inflation was up from 54.44 percent in February.
The highest yearly price increase was in the transportation sector, at 99.12 percent, while the increase in food prices was 70.33 percent, according to the data. It was the biggest year-on-year increase since March 2002.
Rising prices are part of an economic crisis exacerbated by the COVID-19 pandemic. Meanwhile, Russia’s invasion of Ukraine has seen a surge in gas, oil and grain prices.
Turkey’s runaway inflation also follows a series of interest rate cuts late last year, in line with President Recep Tayyip Erdogan’s opposition to high borrowing costs in a bid to boost growth, investment and exports. In contrast to established economic thinking, the president insists that high rates cause inflation.
The central bank cut rates by 5 percentage points between September and December but they have remained unchanged at 14 percent this year.
The lira, which lost 44 percent of its value against the U.S. dollar last year, plunged to a record high of 18.41 against the greenback in December. The currency’s performance has fueled inflation in the import-reliant Turkish economy.
In an effort to soften the blow on households, the government has implemented tax cuts on basic goods and has adjusted electricity tariffs.
