Lira increasingly worthless

Inflation in Turkey rises to 65 percent

100 lira are now only worth around three euros.(Bild: AFP)

Turkish consumer prices rose significantly in January following the sharp increase in the minimum wage. They rose by an average of almost 65 percent compared to the same month last year, as the statistics office announced on Monday. From December to January alone, prices rose by 6.7 percent, more than twice as much as in December. 

Consumers were asked to pay more, particularly in the healthcare sector and in hotels and restaurants.

Experts had expected higher inflation following the unexpectedly sharp increase in the minimum wage at the beginning of the year. Labor Minister Vedat Isikhan had announced that the monthly minimum wage would rise to 17,002 lira (513 euros). This corresponds to an increase of 49 percent compared to the level set in July.

Measured against January 2023, it is even a doubling. Around seven million Turks will benefit from the higher wage floor.

Interest rates at 45 percent
The data comes after the surprising resignation of central bank chief Hafize Gaye Erkan on Friday evening. She had aggressively raised interest rates since last June from 8.5 percent to the current 45 percent to curb inflation. Her successor Fatih Karahan is expected to continue the restrictive policy. "We will keep an eye on inflation expectations and price trends," Karahan said on Sunday. "We are ready to act if the inflation outlook worsens."

Turkey's influential President Recep Tayyip Erdogan, an avowed opponent of interest rates, appointed the former deputy governor to the top post on Friday. The incumbent Erkan had previously resigned unexpectedly after less than eight months in office. The former finance manager cited personal reasons for her resignation. She had become the target of a campaign to damage her reputation.