Turkey’s official inflation rate hit a 23-year high last month as President Recep Tayyip Erdoğan’s unorthodox strategy for managing the country’s $790bn economy continued to backfire.
The consumer price index rose 73.5 per cent year on year in May, according to data from the country’s statistical agency, the highest level since October 1998 when Turkey was reeling from a period marred by unstable coalition governments and economic turmoil.
Food prices, which have become a growing source of discontent among the Turkish public, rose 91.6 per cent year on year.
Erdoğan, a staunch opponent of high interest rates, had ordered the central bank to repeatedly slash borrowing costs in the final months of last year despite rising inflation.
The president claimed he was embarking on a new economic model that would harness a cheap lira and a boom in exports to bring down inflation by eliminating the country’s longstanding trade deficit.
Even before the war in Ukraine, critics had described the plan as a high-risk economic “experiment” that risked causing a collapse in the value of the Turkish lira and ushering in runaway inflation.
Russian president Vladimir Putin’s invasion of Ukraine has increased the challenges, as a rise in global energy prices pushed up the cost of Turkey’s already large energy import bill and further stoked inflation.
While Turkey has enjoyed strong growth thanks to ultra-loose monetary policy, the soaring cost of living has contributed to an erosion of popular support for Erdoğan ahead of elections scheduled for June next year.
Erdoğan last month said those who drew a link between interest rates and inflation were either “illiterate or traitors”.