Consumer prices in Turkey rose 1.06 in January, bringing the annual inflation rate to 20.35 percent, according to the country’s statistical authority’s statement on Feb. 4.
The annual inflation rate was recorded as 20.30 percent in December 2018.
The 12-month average hike in consumer prices was 17.16 percent as of this January, the Turkish Statistical Institute (TÜİK) said.
The highest monthly increase was in food and non-alcoholic beverages with 6.43 percent. The indices rose for miscellaneous goods and services 3.62 percent, for health 3.56 percent, for recreation and culture 3.18 percent and for hotels, cafes and restaurants 1.07 percent in January 2019.
The highest monthly decrease was in clothing and footwear with 7.95 percent. The other group that indicated a decrease was in housing by 3.10 percent amongst the main groups.
The highest annual increase was in food and non-alcoholic beverages with 30.97 percent.
High annual increases realized in miscellaneous goods and services with 29.63 percent, furnishing and household equipment with 29.07 percent, recreation and culture with 23.15 percent and hotels, cafes and restaurants with 19.89 percent.
Turkey inflation has reached an amazingly high figure at 20.30 percent. As we can see form the figures collected by TUIK, an increasing trend of inflation of food and non-alcoholic beverages can be seen, soaring by 6.43 percent, to a shockingly high 30.97 percent. While this was happening, a decreasing trend of clothing and footwear was reflected from the statistics collected, in which the inflation rate dropped by a concerning 7.95 percent.
From the general inflation rate in Turkey, it can be concluded that Turkey has failed to achieve one of its macroeconomic objectives, which is to have a low and stable rate of inflation (around 1% to 3%). Many problems will arise from the general increase in the price level, one of which is the unequal distribution of income. The gap between the rich and the poor will surely experience a substantial increase in the following years, as the reduction of the spending power affects them more than the rich. Secondly, high inflation leads to the Turkish exports becoming less competitive, as foreign consumers will have to pay more for Turkish goods. This might potentially lead to a decrease in the demand for Turkish exports, which then will be accompanied by a fall in the country’s real GDP. These two consequences are followed by many other consequences such as a decrease in saving, efficiency losses and uncertainty in the future.
The change in the trend for inflation suggests a change in the basket of goods for Turkey. This can potentially lead to a change in Turkey’s CPI, causing a change in the inflation figures.