Turkey’s annual inflation rate fell sharply to 64.27% in December 2022, according to official data released by the Turkish Statistical Institute. The decline was largely due to a base effect, or the statistical impact of the high base in December 2021. Consumer prices increased by 1.18% in December compared to the previous month.
In the last report from the Turkish central bank, the year-end inflation expectation was 65.2%. The annual producer price index, which was 136% in November, decreased to 97.72% in December. Inflation in Turkey reached nearly 85.5%, a 24-year high, in October 2022 and dropped slightly to 84.39% in November.
Despite government efforts to combat inflation and salary increases, Turkish households have experienced a significant decline in purchasing power. President Recep Tayyip Erdogan supports low-interest rates in an effort to stimulate economic growth and employment. However, this monetary policy has weakened the Turkish lira by over 50% since September 2021 and contributed to a flight from the currency.
Erdogan, who is seeking re-election this year, has defended his unconventional economic policies and promised that the country would “overcome” the inflation problem in the new year. However, the high inflation rate and weakened currency have caused concern among economists and the general public.