Annual consumer price inflation in Turkey reached an annual rate of 36.08% in December, up from 21% in November, according to Hurriyet Daily News, citing the Turkish Statistical Office, surpassing the former projection of 27% annually for January. The Turkish lira has also suffered the greatest losses in 20 years, covering all the time President Recep Tayyip Erdogan and his Justice and Development Party (AKP) have ruled Turkey. According to the Greek daily Kathimerini the lira lost 44% of its value against the dollar over 2021 and 19% in the last week alone.
The loss occurred despite Erdogan’s “new economic program” which is theoretically aimed at bringing inflation down to 5% and is focused on exports and credit expansion through cutting interest rates. In an obvious effort to preserve hard currency holdings, Erdogan unveiled a scheme two weeks ago in which the state protects converted local deposits from losses versus hard currencies. It initially sparked a sharp 50% rally in the lira, with support from the central bank. Furthermore on Dec. 31, Erdogan called on Turks to keep all their savings in liras and shift gold into banks, claiming that the market volatility was largely under control.
