Turkey needs to address the country’s rampant inflation in 2022 to alleviate the burden on households, which have gone through difficulties as a result of last year’s currency depreciation, experts said.
Turkey’s annual inflation surged to 36.08 percent, the highest since 2002, official data showed on Monday.
Due to a slump of the Turkish currency lira, consumer prices increased by 13.58 percent in December alone, a rare occasion in the history of Turkey, where the monthly data rarely exceeded 10 percent in the past.
Ege Yazgan, a professor of economics at Istanbul’s Bilgi University, told the media that the high annual inflation became a serious problem for the Turkish economy.
He called on policymakers to focus immediately on the measures aimed at lowering inflation in 2022 and moving toward interest rate hikes to reverse the current situation.
In the second half of 2021, the Turkish central bank cut interest rates by 500 basis points, putting strain on the lira.
The lira hit an all-time low of 18.36 against the U.S. dollar on Dec. 20 last year, before rallying sharply the next day as President Recep Tayyip Erdogan announced new measures to protect lira deposits from the currency volatility.
As the lira trades now around 13.2 liras per dollar, the new measures were designed to make citizens feel safer about holding their lira savings in the bank rather than buying foreign currencies or gold.
In the latest move, Erdogan announced at a press conference on Monday that the Turkish government is determined to decrease the inflation to single digit as soon as possible.
Economists expect the current policy to continue until the end of the first quarter of 2022, and the Central Bank will not hike interest rates further.
Investments are expected to create a surplus in exports, higher tourism revenues and low interest on debts, according to economists.
Mustafa Sonmez, an independent economist in Ankara, told Xinhua that the result of the new measures to rescue the lira remained to be seen as official data showed that hard-currency deposits have not decreased thus far.
“2022 is expected to be a year of high inflation in Turkey. Inflation will inevitably erode further the purchasing power of citizens,” he said.
Enver Erkan, the chief economist at Istanbul’s Tera Securities, expected further price increases in the new year.
“Especially, industrial companies that use electricity and natural gas in production will reflect these costs on their prices and cause a general spillover effect,” he said.
