Istanbul, Turkey– Turkey’s annual inflation rate approached 65 percent in December, reaching a new high for 2023 and putting the country on course to meet an expected peak of 70-75 percent in May.
President Recep Tayyip Erdogan’s new team of market-friendly economists expects inflation to start falling from near record highs within four months.
The rate reached a decades-long high of 85 percent in October of 2022 and then fell off before resuming a steady climb.
Turkey’s official annual inflation rate ticked up to 64.77 in December, from 61.98 percent in November.
But the month-on-month pace of increases of 2.93 percent was the smallest of the past six months.
“The underlying inflation trend improved slightly, and inflation expectations stabilized in the last months,” said Bartosz Sawicki, a market analyst at the Conotoxia investment house.
Liam Peach of Capital Economics said the latest figure “will generally comfort the central bank”.
Analysts blame Erdogan — who has called high interest rates “the mother and father of all evil” — for setting off the inflation spiral by forcing the nominally independent central bank to start slashing borrowing costs in 2021.
He reversed course after winning a difficult re-election in May of last year, appointing well-respected economist Mehmet Simsek as finance minister and former Wall Street executive Hafize Gaye Erkan in charge of the central bank.
The central bank has since lifted Turkey’s benchmark interest rate to 42.5 percent from 8.5 percent, breaking through Erdogan’s past aversion to high borrowing costs.
Erdogan has endorsed their new programmed, signaling a major economic policy reversal after more than two decades in power.