ANKARA —
Turkey's annual inflation rate surged to its
highest level since 2002, official data showed Monday, propelled by a currency
crisis linked to President
Recep Tayyip Erdogan's unconventional economic
approach.
اضافة اعلان
Consumer prices soared by 36.1 percent last month from the
same period in 2020, up from a 21.3-percent yearly increase in November,
according to the Turkish statistics office.
The figure is the highest since October 2002, the month
before Erdogan's Islamic-rooted party swept to power in the wake of another
Turkish economic crisis.
Erdogan's enduring success has often been attributed to the
development and prosperity his government enabled during his two decades in
charge as prime minister and president.
But he faces an increasingly difficult path to re-election
in polls due to be held by mid-2023.
Speaking after a weekly cabinet meeting, Erdogan vowed to
support families, workers, students and retired people with an assistance
package that included financial aid for gas bills and wage hikes.
The president said he was "sorry" to see such high
inflation but added: "We're determined to bring down inflation to the
single digits as soon as possible."
Opinion polls show him losing in a second-round runoff
against most major rivals, and his ruling alliance ceding control of parliament
to an increasingly popular group of opposition parties.
Lira collapse
But Erdogan has stuck fast to his policies, opposing
interest rate hikes — which he calls "the mother and father of all
evil" — to combat inflation.
High interest rates are a drag on activity and slow down
economic growth, but they are useful to tamp down inflation as they cut demand
and encourage savings.
Erdogan earlier Monday accused "the elites" of
profiting from "unearned interest income", sticking by his pledge not
to raise borrowing costs.
The
Turkish lira lost 44 percent of its value against the
dollar in 2021, with the losses accelerating at the end of last year, when
Erdogan orchestrated a series of sharp interest rate reductions.
The dollar soared to a historic high of nearly 18.4 liras by
the time Erdogan announced new currency support measures last month that were
backed by reportedly heavy indirect interest rate interventions.
The exchange rate has since slipped back down to around 13
liras to the dollar.
A dollar was worth 7.4 liras at the start of 2021.
Turkey's monetary authority took another step towards
propping up the lira by ordering exporters to sell a quarter of their foreign
currency revenues to the central bank, thereby supporting its fast-dwindling
reserves.
Questions over data
The monthly inflation reading has turned into a
politically-sensitive issue in Turkey, with opposition leaders claiming the
government is putting pressure on the statistics agency to underreport price
jumps.
They point to separate readings prepared by independent
economic institutes such as the
Inflation Research Group (ENAG), which
calculated last month's annual inflation rate at 82.8 percent.
The official readings show prices for most food staples
raising substantially above the annual inflation rate.
The price of milk, yogurt and sunflower oil all jumped by
roughly 75 percent on the year, while that of chicken rose by 86 percent.
One study published by the Metropoll agency on Monday showed
90 percent of respondents — including more than three-quarters of ruling party
supporters — saying they believed Turkey's actual annual inflation rate was at
least 50 percent.
Earlier Monday, Erdogan said he would be visiting the
cash-rich energy giant Saudi Arabia in February.
It follows a visit to Ankara by Abu Dhabi
Crown Prince Sheikh Mohammed bin Zayed in November, when billions of dollars of investment
was announced.
With his push for more exports, Erdogan will likely raise
Turkish exporters' complaints of delays at Saudi customs in a bid to resolve
the issue in Ankara's favor.
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