Turkey's inflation hits 54%, deepening cost-of-living woes

Turkey’s annual inflation rate has further accelerated in February, marking the biggest jump since 2002 and deepening the squeeze on households that are already struggling to purchase basic goods

Turkey Economy (AP)

Turkey’s annual inflation rate further accelerated in February, official data showed Thursday, marking the biggest jump since 2002 and deepening the squeeze on households that are already struggling to purchase basic goods.

The Turkish Statistical Institute said consumer prices rose 54.44% in February compared with a year ago. That is up from nearly 49% in January.

In comparison, annual inflation increased by a record 5.8% in the 19 countries that use the euro currency in February and by 7.5% in the U.S. in January — the fastest pace in 40 years.

In Turkey, the highest yearly price increase was in the transportation sector, at 75.75%, while the increase in food prices was 64.47%, according to the data.

Turkish consumers have been hit with rising prices following a series of interest rate cuts last year that triggered a currency crisis.

President Recep Tayyip Erdogan strongly opposes high borrowing costs, insisting that they cause inflation — a position that contradicts established economic thinking.

Turkey’s central bank has cut rates by 5 percentage points since September, to 14%, despite high inflation rates — before pausing them in January and February. The Turkish lira lost 44% of its value against the U.S. dollar last year.

In a bid to bring some relief, the government last month reduced value-added tax on basic food to 1%, from the previous 8%.

It also introduced a set of measures to reduce surging power bills, including readjusting the level under which higher electricity tariffs for households and some businesses using more energy kick in.