Turkey Enters Galloping Inflation – Trustnodes
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Inflation is galloping in Turkey, jumping to 48.69% in January from 36% in December, itself a jump from 21% in November as pictured above.
That makes this the worst rate of inflation since 2004 when it was coming down from 100% in the late 90s.
Consumer prices are now rising 11.1% a month, with everything so becoming more expensive by the day.
Transportation prices are rising the most at 68.9% following spikes in gas and oil prices. Food is up 55.6% while furnishings and household equipment rose by 54.53%.
That’s imports in effect with the Lira crashing since October from 8.8 to the dollar, to now 13.54.
That led to one bitcoin nearing one million Lira back in December as Turks flocked to crypto with it now down to half a million Lira.
Their interest rates have been lowered as well down to 14% from nearly 25% in 2018 when they were quickly increased from 7% following some sanctions by the Trump administration.
That’s when their economy took a dive as well to a recession in 2019, but now it is growing somewhat decently at 7.4% last quarter and 21.7% the quarter before that.
Turkish President Recep Tayyip Erdogan worried that the spike in interest rates was slowing down the economy, thus changed central bank governors a number of times with interest rates now in a gradual decline.
The lira is holding on however to this level of 13.5 since January, with the big question of course being whether prices will stabilize if that level continues.
That’s because there’s always a risk inflation takes a life of its own with it a very complex phenomena especially because money creation is a somewhat decentralized process in that commercial banks increase supply by making loans.
Too many loans at the same time, and too much money enters the economy with interest rates of 14% presumably being very profitable for banks.
Thus many Turks are hedging with bitcoin which has a fixed supply, with their biggest exchange BtcTurk handling $150 million in crypto trading volumes a day, including some $13 million in USDt/TRY.
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