Retail prices in Turkey’s largest city and commercial hub of İstanbul increased 4.09 percent month-on-month in July, for an annual rate of 99.11 percent, the city’s highest inflation since February 1998, local media reported on Monday, citing data from the İstanbul Chamber of Commerce (İTO).
The gap between inflation in İstanbul and Turkey’s official inflation rate, which increased to almost 80 percent last month – the highest in 24 years – is increasing every month, according to Turkish media reports.
In the last three months of May, June and July, the difference between the two figures was 9.9 points, 13.8 points and 15.6 points, respectively.
ITO said inflation in İstanbul had reached an annual rate of 94.2 percent in June, while data from the Turkish Statistical Institute (TurkStat) showed Turkey’s inflation rate at 78.6 percent, with annual prices rising from 73.5 percent in May.
According to official data, the surge in inflation in June was driven by a jump of 123.4 percent in the cost of transportation and a 94 percent increase in non-alcoholic beverages.
However, opposition parties and economists said recent hikes in oil and gas prices meant the real rate of inflation was almost double the official figure.
A monthly report released by Turkey’s ENAG group of independent economists showed consumer prices rising by 175 percent in June compared with a year earlier. ENAG said prices had risen by 71.4 percent since the start of the year alone.
A survey published by Metropoll last month showed that 69 percent of respondents believed the unofficial ENAG figure and just 24 percent the one reported by the government.
TurkStat is expected to announce July’s annual inflation rate on August 3.
Turkey’s crisis started when President Recep Tayyip Erdoğan forced the central bank to go through with a series of interest rate cuts last year that he said were part of his “new economic model.”
The policy rate went down despite rising consumer prices.
But the Turkish leader rejects conventional economics and insists that high interest rates cause prices to rise.
Economists believe his approach has exacerbated the pain felt worldwide from the jump in food and energy prices caused by Russia’s invasion of Ukraine.