Inflation in Turkey is rearing its head again and today it was announced that it reached 58.9% in August.
This happens after eight months of falling inflation which in June reached 38.2%, the lowest level in 18 months. But since then, as mentioned, inflation has risen dramatically, to 47.8% in July and now 58.9%.
Independent economists estimate that in practice the rate of increase in consumer prices hovers around 128%.
The jump in prices comes precisely after the central bank changed direction and raised the interest rate in the economy sharply from 8.5% to 25%, with the aim of fighting inflation. As you know, Turkish President Erdogan is an advocate of low interest rates to encourage growth through consumption.
However, after being re-elected in May, he seems to be changing direction and away from the key positions of economists advocating a policy of raising interest rates. The question is whether Erdogan is indeed convinced that this is the right policy or that his "short fuse" will burn out soon.