Inflation in Turkey hit 68.5% despite rate hikes, the highest level in 20 years

Turkey’s inflation rate rose to 68.5% annually, marking a 1.4% increase from February, despite the government’s efforts to curb inflation through interest rate hikes.

What happened: The Turkish Statistical Institute reported a monthly increase in consumer prices of 3.16%, with the education, communication and hospitality sectors recording the most significant increases. On a year-over-year basis, education saw an increase of 104%, followed by hospitality at 95% and healthcare at 80%, CNBC reported.

The Turkish government has actively addressed soaring inflation by implementing a series of interest rate increases. The most recent increase, in late March, saw the country’s policy rate rise from 45% to 50%.

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Because matter: Turkey’s inflation rate has reached its highest level in 20 years, posing a significant challenge for the government. The surge in inflation has been attributed to a number of factors, including rising global energy prices, the weakening of the Turkish lira and the economic fallout of the COVID-19 pandemic.

Earlier this year, another emerging market, Argentina, faced a similar situation. President Javier Milei has announced plans to dismantle the country’s central bank, a move supported by the International Monetary Fund. This decision, in line with Milei’s ultra-libertarian ideology, could potentially shift Argentina’s economic landscape towardsdollarization.

Meanwhile, the global economy is grappling with the impact of inflation. A recent Benzinga report highlighted how 73% of Gen Z individuals have changed their spending habits due to rising prices. This trend is not unique to Turkey, as countries around the world feel the effects of inflation.

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