Turkey’s inflation slows to 50% ahead of election

Turkey’s annual inflation rate slowed to 50 per cent in March, official data showed on Monday, delivering another boost for President Recep Tayyip Erdogan ahead May elections.

The inflation rate slowed for a fifth consecutive month from a high of more than 85 percent, according to the state statistics agency.

The official rate stood at 50.5 last month, down from 55.2 percent in February. The slowdown was led by a drop in the cost Turkey’s energy imports, the figures showed.

But analysts warn that consumer price increase may start speeding up again unless Turkey radically alters its economic policies.

Erdogan has tried to fight inflation by slashing interests rates, the opposite approach taken by central banks in other countries.

Analysts warn that the economy may start heating up as the government rebuilds huge swaths of Turkey’s southeast that were hit by a massive earthquake in February in which more than 50,000 people died.

Turkey’s economy must now absorb the consequences of the catastrophe which, according to the World Bank, caused an estimated $34.2 billion in direct physical damages -- the equivalent of four percent of Turkey’s 2021 gross domestic product.

Erdogan, who will try to extend his rule into a third decade in the May 14 election, put the cost of the damage at $104 billion.

Turkey’s official inflation rate is questioned by independent economists from the ENAG research group, which estimates that consumer prices increased at an annualised rate of 112.5 per cent in March, down from 126.9 per cent in February.