Turkey Introduces New Measures to Combat Inflation

The Turkish Treasury and Finance Minister Nurettin Nebati has announced that the government is taking measures to mitigate the effects of high inflation in the country. The Turkish Statistical Institute reported on Monday that the annual inflation rate accelerated in June, reaching 78.62% compared to 73.5% in May.

The Inflation Research Group (ENAG), established by scientists and economists, also took into account the rise in consumer prices in Turkey for June. According to their data, the annual inflation rate has surged to 175.55%, up from 460.76% a month earlier, with consumer prices increasing by 8.31% in June.

“Despite our measures, the global prices of raw materials continue to rise, particularly in energy and agricultural products. Numerous steps have been taken, ranging from VAT reductions to subsidies, regulating prices to mitigate the negative impacts of inflation. Necessary actions are being implemented,” quoted Nebati by the Türkiye newspaper.

Nebati predicts an inflation rate of 48-49% by the end of 2022, with a reduction to 19.9% expected for 2023. He noted that changes to interest rates are not being considered in the short term.

Last year, following several cuts to interest rates, the lira's value sharply decreased, negatively impacting the country’s financial system. The annual inflation rate rose to 36% amid fluctuations in the national currency.

The Central Bank of Turkey has kept the interest rate unchanged at 14% this year, while the lira has gradually weakened. At the end of January, the exchange rate was about 13.5 lira to one dollar, rising to 14 lira by the end of February, and now reaching 17 lira.