Turkish finance minister vows to rid Turkey of the scourge of inflation

Turkish Treasury and Finance Minister Nureddin Nebati pledged to defeat high inflation after official data showed consumer prices jumping by an annual 69.97 percent in April.

“Everyone should know that we will get rid of this scourge of inflation with the same willpower that we showed when we emerged stronger from all kinds of crises we faced as a nation over the past 20 years,” Nebati said in comments on Twitter on Thursday.

He did not outline any new steps that the government might take to rein in price increases.

Turkey’s government is implementing an economic programme focused on creating a current account surplus and fast economic growth. The central bank has cut interest rates to help state-run banks and other financial institutions lend cheaply to industry. But the rate reductions, ordered by President Recep Tayyip Erdoğan late last year during a spike in global inflation, have hit confidence in the economy, causing sharp losses for the lira.

The current account has also fallen deeply into deficit despite an increase in exports, pressuring the lira.

“We will overcome all of our problems one by one by moving ahead with patience, persistence, faith and togetherness on the way to becoming the leading country that shapes the future. Let no one have the slightest doubt about our determination and perseverance!” Nebati said.

The government's steps to tackle inflation have focused on punishing companies deemed to have increased prices unfairly and on stabilising the lira through interventions in the currency market and a bank deposit scheme linking returns to the dollar. 

Inflation in Turkey may remain in a band between 65 percent and 75 percent until December, said U.S. investment bank JPMorgan Chase & Co., the Dünya newspaper reported on Friday.

Erdoğan and his governing Justice and Development Party (AKP) must set a date for presidential and parliamentary elections of June 2023 at the latest. Inflation in Turkey, the sixth highest in the world, is eroding the spending power of many voters, hurting Erdoğan’s approval ratings.

Analysts and investors following Turkey are casting doubt on official inflation data, saying it may hide the true scale of the price increases. Some independent assessors of prices in Turkey have put the annual rate of change at more than 100 percent.

ENAGGroup, a research group established by Turkish academics to calculate inflation, said on Thursday that annual inflation for April accelerated to 156.9 percent. ENAG says it uses the same methods to calculate inflation as the state statistics office.

The lira lost 44 percent of its value against the dollar last year. It has dropped more than 10 percent in 2022. The currency was trading down 0.5 percent at 14.93 per dollar on Friday.

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