Three years into Şimşek's program, Turkey's inflation down only 6.46 points
Turkey’s consumer prices rose 1.78% in July from the previous month, according to data released by the Turkish Statistical Institute (TurkStat).
Annual consumer inflation stood at 31.75%, while prices have increased by 19.86% since the start o the year.
The 12-month average, which sets the rent increase rate, was 31.90%.
The İstanbul Chamber of Commerce (İTO), which tracks price changes in Turkey’s largest city, reported monthly inflation of 2.06% and annual inflation of 35.20%.
Inflation record under Şimşek
Mehmet Şimşek was appointed treasury and finance minister in June 2023 following the presidential elections, once again taking a role in the country's economy administration after two spells in the late 2000s and 2010s.
The inflation rate stood at 38.21% when he took office.
His appointment was widely seen as a shift toward more orthodox economic policies to move away from President Recep Tayyip Erdoğan’s “low interest rate-low inflation” theory. After taking office, he launched a campaign to reduce inflation.
However, the inflation has fallen by only 6.46 percentage points in the three years and one month since Şimşek took office. The decline was neither steady nor uninterrupted, despite tight monetary policy and high interest rates. The Central Bank's policy rate currently stands at 37%, slightly above the inflation.
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Food and housing inflation exceed headline rate
Price increases in essential spending categories, which account for a large share of household budgets, exceeded the general inflation rate.
Annual inflation reached 37.53% for food and nonalcoholic beverages. Prices for housing, water, electricity, gas and other fuels increased 40.32%, while transportation costs rose 30.83%.
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Food and nonalcoholic beverages made the largest contribution to annual inflation, adding 8.94 percentage points. Transportation contributed 5.22 points, while housing added 5.21 points.
Together, the three essential spending categories accounted for 19.37 percentage points of the annual inflation rate.
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Also, TurkStat contnued not publishing its item-level consumer basket price list since Apr 4, 2022, despite a court ruling requiring it to do so.
Transportation posts largest monthly increase
Transportation recorded the largest monthly price increase in July, rising 2.59%.
Prices for housing, water, electricity, gas and other fuels increased 2.25%, while food and nonalcoholic beverages rose 1.61%.
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Transportation contributed 0.44 percentage points to monthly inflation. Food added 0.40 points, while housing contributed 0.27 points.
The three categories therefore accounted for 1.11 percentage points of the overall monthly inflation rate of 1.78%.
Prices rose in 117 subcategories
TurkStat’s subcategory data also showed that price increases were spread across much of the economy. Prices rose in 117 of the 174 subcategories covered by the index.
Prices declined in 50 subcategories and remained unchanged in seven.
Health prices lead increases in İstanbul
İTO data showed that health spending recorded the strongest monthly increase in İstanbul, with a 9.77% increase from the previous month. Transportation followed with a 4.42% increase, while communication costs rose 3.69%.
Publicly administered price adjustments for some products and services contributed to the increases in these three categories.
Clothing and footwear was the only main spending category in which prices declined. (HA/VK)
