A money changer holds Turkish lira banknotes and US dollars at a money exchange office in Ankara, Turkey, on December 16, 2021.
Cagla Gurdogan | Reuters
According to the Turkish Statistical Institute report released on Wednesday, Turkey’s annual inflation rose to 68.5% in March, up from 67.1% in February.
The monthly increase in consumer prices was 3.16%, led by education, communications and hotels, restaurants and cafes, which recorded month-on-month increases of 13%, 5.6% and 3.9%, respectively.
On a year-on-year basis, education once again saw the highest cost inflation at 104% year-on-year, followed by hotels, restaurants and cafes at 95% and healthcare at 80%.
Turkey has launched a concerted effort to counter soaring inflation with interest rate hikes, most recently raising the country’s policy rate from 45% to 50% in late March.
Much of the inflation in recent months comes from a significant increase in the minimum wage imposed by the Turkish government for 2024. The annual minimum wage rose to 17,002 Turkish lira (about $530) per month in January, a 100% increase over at the same value. period of the previous year.
Economists predict that further rate hikes by the central bank will be necessary.
While March’s inflation tally represents “the smallest monthly increase in three months and suggests that the impact of January’s large minimum wage increase may now be largely over, it is still far from consistent with the single-digit inflation that policymakers are trying to measure. achieve,” Nicholas Farr, emerging Europe economist at London-based Capital Economics, wrote in an analyst note on Wednesday.
“The latest inflation data does little to change our view that further monetary tightening is in store and that a more concerted effort to tighten fiscal policy will also be needed,” he said.