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Turkey’s inflation rate hits a new 20-year high of 54%

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Inflation in Turkey has increased to a fresh 20-year high, a higher than expected 54.44% for February, as the lira continues to suffer and energy prices climb.

Prices of consumer goods rose 4.81% on the previous month, according to the Turkish Statistical Institute on Thursday. The producer price index jumped 7.22% on the prior month, clocking an annual increase of 105%.

Record energy imports in January helped Turkey’s trade deficit soar, and commodity prices continue to mount amid supply concerns and the Russian invasion of Ukraine. Brent crude is up 53% year-to-date.

Turkish President Recep Tayyip Erdogan has prioritized credit and exports, while consistently arguing — against all economic orthodoxy — that raising rates actually worsens inflation rather than taming it.

Turkey’s central bank has cut interest rates by 500 basis points since September to 14%.

The Turkish lira has lost roughly 47% of its value in the last full year, in a rout driven by Erdogan’s refusal to raise rates as inflation consistently climbed. The currency’s turbulence has hit Turks hard, as the value of their salaries dropped and living costs dramatically increased. Steep hikes in electricity and natural gas tariffs have compounded the pain for consumers and businesses.

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