Since Recep Tayyip Erdogan came to power nearly 20 years ago, Turkey’s inflation rate has reached its highest level because the president’s controversial economic management has triggered a surge in prices.

Data released by the Turkish Statistics Agency on Monday showed that the country’s consumer price index rose 36% year-on-year in December.

It marked the highest level of consumer price increases since September 2002, when Turkey was suffering from a financial crisis that paved the way for Erdogan’s Justice and Development Party (AKP) overwhelming election victory in November of the same year. The road was leveled.

This figure has risen sharply from the 21% inflation rate officially announced last month. Earlier, President Erdogan ordered the central bank to repeatedly lower interest rates despite the double-digit inflation rate in recent months.

He insisted that the bank reduce the benchmark lending rate by a total of 5 percentage points to 14% since September, which resulted in a severely negative real interest rate, caused investors to flee the Turkish lira, and caused inflation in the country. Highly dependent on imported energy and commodities.

This, in turn, caused public dissatisfaction with the rising cost of living and led to a decline in support for AKP in public opinion polls.

Inflation in December was higher than the 30% generally estimated by analysts, which was driven by a sharp increase in transportation costs, which rose by nearly 54% year-on-year, and food and beverages by nearly 44%. point.

The exchange rate of the lira against the U.S. dollar has depreciated by about 45% in 2021, which shows that companies are suffering, and the producer price index has risen by 80% year-on-year significantly faster.

Ibrahim Aksoy, an analyst at HSBC in Istanbul, warned that inflation may rise further in the coming months, and that inflation is expected to reach around 42% in April and May.

The opposition party in the country is frustrated with these figures. Durmus Yilmaz, a former central bank governor and now a senior official of the IYI party, said that inflation is the “root cause” of the country’s economic problems and called for an “emergency stabilization plan”.

Ali Babacan, a former Erdogan ally, now leads the opposition Deva Party. He stated that the real inflation rate is even higher than the official figure, saying that the country’s statistical agency is a “figure-manipulating agency”. He said that this rate is “not even close” to the significant increase in energy prices announced at the beginning of this year, when electricity prices for the most intensive commercial users rose by 125%, or about 50%. For the family.

Erdogan, who has long opposed high interest rates, refused to accept the traditional economic wisdom that raising borrowing costs would help curb high inflation.

Despite the growing frustration of the Turkish business community, the Turkish President continues to insist that lowering interest rates will ultimately help achieve price stability, which is part of what he calls a new economic model aimed at promoting exports, investment and job creation.

Recognizing the pain caused by inflation to the public, Erdogan vowed last month that his government will not allow workers to be “crushed” by rising prices because he announced a 50% increase in the minimum wage in lira.

Economists warned that although it is necessary to raise the wages of the lowest-paid workers to protect them from the rising cost of living, such a large wage increase itself will lead to inflation, and price increases run the risk of getting out of control. .