Turkey’s long-standing sky-high inflation rose further in September. The cost of living in the country is now 83.5 percent higher than a year ago; in August, the increase was over 80 percent.
Currency depreciation in Turkey is at its highest level in about 24 years.
Turkish inflation has been in double digits for some time now. As a result, authorities in the country prioritized economic growth and exports. What has also played a role lately is that Turkish President Recep Tayyip Erdogan, contrary to the prevailing theory among economists, thinks that higher interest rates lead to higher prices.
Under Erdogan, the central bank is mainly concerned with keeping interest rates low. Most recently, Erdogan said that he believes interest rates could fall further. However, elsewhere in the world, interest rates are being raised to curb inflation.
Dutch holidaymakers who travel to Turkey generally do not suffer much from the situation because the lira has fallen in value. Due to the exchange rate effect, the price increases are, therefore, relatively minor.
At the beginning of August, it was announced that ING did feel the sharp rise in inflation in Turkey in its results. Because the increase in prices in that country had become so high that there was hyperinflation, the bank had to adjust its Turkish subsidiary’s books, and the group profit was hit by roughly a quarter of a billion euros.