Turkey has highest food inflation among OECD countries

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Turkey's food inflation was the highest among the Organization for Economic Cooperation and Development (OECD) countries in 2022, according to data published by the organization on March 7.

The country's food inflation was 71 percent while the OECD average was 15.2 percent.

Turkey's inflation numbers rank 2nd out of 37th countries, only being surpassed by Argentina, according to the data published on March 7.

"The club of mostly rich countries" assessed Turkey's annual consumer inflation at 57,7 percent for 2022. Argentina ranks first with inflation being measured at 98 percent, Hungary stands third with 25,7 percent.

The annual consumer inflation in all OECD countries was calculated at 9,2 percent in January 2023. The inflation of G20 countries, a group existing out of 19 countries and the EU, was estimated at 8,4 percent, and the inflation in the Eurozone was assessed at 8,7 percent.

Energy inflation is declining in most OECD countries. After a peak in June 2022, it dropped to 16,4 in December 2022. 

Inflation likely to remain high

Turkey's high figures are mainly attributed to President Erdoğan's unorthodox economic policy of slashing interest rates. Usually, to curb inflation central banks bring up the interest rates. However, in Erdoğan's eyes, high-interest rates are considered "the mother of all evil."

This unconventional economic policy might be explained by his conservative Islamic background, with interest being forbidden in Islam, and his desire to publish economic growth figures. Additionally, experts point out that low-interest rates can be "beneficial" for sectors close to President Erdoğan and his Justice and Development Party (AKP), such as construction and real estate.

Over the past years, high inflation numbers resulted in soaring food prices, skyrocketing rental prices, and a record number of small businesses going bankrupt.

These economic woes have led to discontent among President Erdoğan's voters base in the upcoming May 14 double election.

The OECD predicts Turkey's inflation to remain high in the upcoming years. Forecasting that in 2023 the inflation rate will be 44,6 percent and in 2024 41,4 percent, with the GDP growing by 2,8 percent and 3,8 percent in the same years.

Turkey's central bank is more positive when it comes to the country's inflation, estimating that by the end of 2023 inflation will have dropped to 22,3 percent. (HA/WM)