In the report by the Turkish Statistical Institute, the consumer price index (CPI) in August of 2023 is placed at 58.94 percent, a significant decrease from the same month in 2022 which saw 80.21 percent. The CPI is a measure of inflation, by evaluating the average monthly change in prices paid by the consumers for a basket of consumer goods and services.
Under Turkish President Recep Tayyip Erdogan’s unorthodox economic policies, the interest rate was slashed to 8.5 percent, which saw inflation skyrocket up to 85.5 percent in 2022, a 24-year high. The increase resulted in an aggravated cost of living crisis inside Turkey, forcing the government to increase the minimum wage several times.
After his re-election in May’s presidential elections, Erdogan appointed Mehmet Simsek as the finance minister and former Wall Street executive Hafize Gaye Erkan as the governor of the central bank.
Erkan quickly increased interest rated to 15 percent in June in order to combat inflation and the rapid depreciation of the Turkish lira. In late August, Erken increased the interest rate to 25 percent.
In May, net foreign reserves of the central bank dropped into negative territory and the annual inflation rate was announced as 39.59 percent, according to Turkey’s statistics body.
Erdogan following re-election promised to improve the economy and signaled a pivot away from his unorthodox policies of the past, beginning with appointing Simsek to the role of finance minister.
During the ceremony to hand over power, Simsek emphasized the need to return to more “rational economic policies.” His comment was hailed as a new start for Turkey to regain economic stability.
