The current AKP government has been to tame Turkey’s chronically high inflation which in the 1990s was running at an average of 80% and at times 120%. During the rule of The Justice and Development Party the inflation rate fell to single figures. However, the latest figures show, that the inflation rate is rising, while growth is slowing down.
Much of the support for the current government has been based on strong economic growth. And Prime Minister Recep Tayyip Erdogan, who is seeking to become President in the summer, needs a buoyant economy to keep the voters happy.
However, the Turkish economy is heavily dependent on foreign currency. Inflation is not always bad for an economy, but when a country has high inflation it is an indication that not everything is going well. Turkey’s inflation rate is at a two-year high and rising faster-than-expected. The trend raises questions whether or not the country’s central bank will give in to government pressure to cut interest rates this month, ahead of the Presidential election this summer.