Inflation in Turkey in June soared to an annual rate of 78.6 percent — the highest in 24 years, according to official data released Monday — as President Recep Tayyip Erdoğan’s unconventional economic policies continued to take their toll, Agence France-Presse reported.
But unofficial estimates published by Turkish economists showed prices rising at more than double that figure.
The inflation rate reported by Turkey’s state statistics agency was the highest since January 1998.
Inflation had stood at 73.5 percent in May and at 15.0 percent at the start of last year.
Economy Minister Nureddin Nebati on Friday vowed that consumer prices will start dropping in December.
“I promise to you and to the president, we will see a drop in inflation starting in December,” he was quoted as saying by Turkish media.
According to official data, the surge in inflation in June was driven by a jump of 123.4 percent in the cost of transportation and a 94 percent increase in non-alcoholic beverages.
Turkey’s crisis started when Erdoğan forced the central bank to go through with a series of interest rate cuts last year that he said were part of his “new economic model.”
The policy rate went down despite rising consumer prices.
But the Turkish leader rejects conventional economics and insists that high interest rates cause prices to rise.
Economists believe his approach has exacerbated the pain felt worldwide from the jump in food and energy prices caused by Russia’s invasion of Ukraine.
Questions over data
However, more and more economists are starting to question Turkey’s official data.
A monthly report released Monday by Turkey’s ENAG group of independent economists showed consumer prices rising by 175 percent in June.
ENAG said prices had risen by 71.4 percent since the start of the year alone.
The Istanbul Chamber of Commerce said inflation in Turkey’s largest city has reached an annual rate of 94 percent.
“No one actually believes official Turkish data anymore,” said BlueBay Asset Management economist Timothy Ash.
“There is no expectation of anything like a credible policy response.”
Turkey on Friday substantially raised the minimum wage for the second time in a year to cushion the blow on households ahead of next year’s general election.
The hike of the net monthly take-home pay to 5,500 lira ($330) means the nominal minimum wage has nearly doubled since the end of last year.
It stood at 2,826 lira in late December and 4,253 lira in January.
Economists warn that substantially raising the pay of a large swathe of the population is an inflationary measure that should be accompanied by interest rate hikes or other means of limiting spending.
Official data show that more than 40 percent of Turks were earning the minimum wage at the start of the year.