Turkey’s war with inflation: ‘Prices change daily and everyone is scared’ (2023)

From behind the counter in a bakery in Kasımpaşa, a working-class Istanbul neighbourhood, Mustafa Kafadar can see the orange, white and blue banners of Recep Tayyip Erdoğan’s Justice and Development party (AKP) as they blow in the spring breeze.

Kafadar has been wrenched out of retirement by Turkey’s economic crisis – his pension is no longer enough to cover his basic expenses. Now he works shifts in the bakery, where he describes living from payday to payday while he sweeps crumbs off a tray.

“Everything’s very expensive. After I buy my essentials and pay my bills, there’s nothing left,” he says.

Asked who is responsible, he chuckles darkly. “You know who makes inflation high,” he says cryptically, reluctant to voice his opinion of Erdoğan’s economic policies directly. “Not me, not you, not someone on the street – but who?” Kafadar has requested that his name be changed for his safety.

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Turkey is weathering an unprecedented financial crisis. After the lira lost half its value last year alone, the country is now struggling with rocketing inflation, officially 61.14%.

Kafadar arranges rows of delicate breakfast pastries – fluffy round açma filled with olives or chocolate, börek and glossy poğaça buns – as customers arrive. He tells me they sometimes fly into a rage with him about prices. Jars of pink and white sugared almonds and an entire counter of elegant layer cakes, decorated with fruit and chocolate, sit untouched, now a little too pricey for most.

“Sugar and wheat prices have gone up. A kilogram bag of flour was 110 lira [£6.15] back in January; now it’s 220 lira,” he says. Pointing at some of the cheapest buns, he adds: “We couldn’t make the prices of the poğaças any higher, as people can’t afford it.”

When Turkey’s official inflation rate broke 50% in February, it represented both a two-decade high and a huge political problem for the government. The finance minister, Nureddin Nebati, insisted earlier this month that the surge was “temporary”, while Erdoğan recently vowed to protect Turks against inflation.

“As the Turkish economy is getting ready to become one of the world’s top 10 economies, we have said that we will not waste this opportunity with careless and thoughtless steps,” he said. “We will get out of this situation in a way that will not crush our citizens with inflation.”

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Turkey’s war with inflation: ‘Prices change daily and everyone is scared’ (1)

Spiralling inflation is tied to the government’s efforts to radically overhaul the Turkish economy, keeping interest rates low in the belief that this will stimulate it and increase production – against the advice of most experts. There have also been frequent changes in key personnel at the central bank – Turkey has now had four central bank chiefs in three years.

“Yes, everyone is experiencing inflation worldwide, but Turkey is experiencing it at almost four or five times the rate of others,” says Alp Erinç Yeldan, an economist at Istanbul’s Kadir Has University.

“This is after a series of policy mistakes and ambitious expansionary projects, including following an economic policy that evades the rules of gravity.”

The inflation rate has become a political issue in itself: In January, Erdoğan fired the head of TÜİK, the country’s official statistics agency, angry that official inflation data for last year showed a record high. The independent economic research group Enag, which monitors Turkey’s inflation rate using the same metrics as the government, calculates real inflation was 142.63% in March. “One hundred and forty-two per cent is hyperinflation, no doubt about it.” says Yeldan. Since rising prices began to bite last September, Enag’s calculations of real inflation have consistently been double the official rate, he adds.

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Turkey’s financial crisis has been further compounded by Russia’s invasion of Ukraine, which has driven up global food prices, particularly for wheat. The lira’s slide against the dollar was already affecting Turkey’s ability to import wheat, but the loss of Ukrainian supplies has left it scrambling to find alternatives, including dipping into its own reserves.

‘I paid a 1,000 lira electricity bill in February, just for these two machines,” says Mehmet Aslan, pointing at two refrigerators holding cured meat, cheese and plump yellow rounds of butter from the town of Rize, where his family comes from (as does Erdoğan’s). Last Ramadan, Aslan says his shop was bringing in 6,000-7,000 lira a day in sales; this year he’s lucky if it breaks 1,500 lira.

“People are making up prices,” he adds, pointing to a large jar of honey. “I could just make that 400 lira [£21] and no one would say anything. I could even make it 500.”

Turkey’s war with inflation: ‘Prices change daily and everyone is scared’ (2)

Still, Aslan is reluctant to blame the government for the current state of affairs. “Inflation is now out of control of the government,” he says. “I’m not happy with prices. I blame the population – it’s beyond Erdoğan’s control and everyone’s trying to bring him down.”

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Turkey’s efforts to find a diplomatic solution to the war in Ukraine – catapulting Erdoğan back on to the world stage as a statesman rather than an aspiring autocrat – has helped deflect some of the criticism. His personal approval rating rose in March to 43.3%, while the AKP’s share of the vote increased by 3%, according to polling organisation Metropoll.

Yet polls have also shown that more than half – 53.6% – of Turkish citizens were only just managing to meet basic needs last May, while a quarter said they couldn’t cover their essential costs. Earlier this year, delivery and supermarket workers staged prolonged strikes to demand wage increases in line with inflation.

Energy costs in Turkey began to rise at the beginning of this year, but, as with the price of wheat, Russia’s invasion of Ukraine has sent them soaring. Turkey imports about a third of its gas from Russia. The state-owned pipeline operator Botas said this month that the price of gas for electricity generation would rise by almost 45%, with a 50% rise in prices for industry and 35% for households.

As prices rose, Kemal Kılıçdaroğlu, the leader of the opposition Republican People’s party (CHP), declared on camera that he would not pay his own electricity bill until Erdoğan brought prices down. AKP officials labelled this “a provocation”.

Ordinary Turks remain “preoccupied with the economy”, says Ekrem Cunedioğlu, an economist with the opposition İyi party. It is hoping to persuade the Turkish public that it can fix the economy as elections, which are due by or before 2023, start to loom. “What we see from the data is rising deep poverty, meaning income not meeting basic needs. Inflation might reduce next year but deepening poverty will prove tougher to solve.”

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Pınar Duru, who runs a boutique bakery in Istanbul’s wealthy Cihangir neighbourhood, says she has started baking bread only to order and opening her shop at reduced times in order to save energy costs.

“From October on, inflation began hitting hard,” she says. “I make brioche, and the price of everything, eggs, flour, sugar, butter … suddenly increased. It’s still doing so, on a daily basis – one day I check the price of eggs, and the next day it’s different.”

Turkey’s efforts to find a solution in Ukraine, and potentially bring down food prices in the process, bring little solace, Duru adds. “It brings me no comfort or distraction – I live with the prices in my regular life, and my friends do too. Yes we talk about the war, but right now all we talk about is inflation,” she says. Prices are changing on a daily basis and everyone is scared for their future, she adds. “Unless I see the dollar go down, I’m not going to feel comfortable or secure.”


Why is inflation in Turkey so high? ›

When currencies fall in value, things brought from abroad become more expensive. With most countries importing goods, such as fuel, materials or technology, weaker currencies mean higher prices. This has fuelled record-breaking inflation in Turkey -- among the highest rate in Europe.

How is Turkey dealing with inflation? ›

Last year Turkish President Recep Tayyip Erdogan took the unorthodox step of cutting interest rates to try to boost the economy. Most central banks raise interest rates to fight inflation. The transport sector saw the sharpest increases in annual prices at 117.66%, followed by food and non-alcoholic drinks at 93%.

What is happening with Turkish economy? ›

The Current State of the Turkish Economy

The short-term external national debt is $185.3 billion. Due to high energy and commodity prices, exacerbated by Russia's invasion of Ukraine in late February 2022, Turkey has a persistent current account deficit, although depreciation of the local currency has not reduced this.

Where is the highest inflation in the world? ›

Argentina and Turkey are currently experiencing the highest inflation rates in the G20. In October 2022, Turkey's rate reached 85.51% (compared with prices in October 2021).

What will Turkey do in 2023? ›

First, Turkey aims to achieve all EU membership conditions and become an influential EU member state by 2023. Second, it will continue to strive for regional integration, in the form of security and economic cooperation. Third, it will seek to play an influential role in regional conflict resolution.

Is the Turkey a rich or poor country? ›

RankCountryGDP-PPP ($)
48Slovak Republic38,620
141 more rows
1 Aug 2022

Why is Turkey so strategically important? ›

Any architecture in Eurasia, whether political, economic or for security, cannot be realised without Turkey being a part of it. In addition, the EU's Eastern Mediterranean and Near East policies cannot be implemented without Turkey's contribution.

Is corruption high in Turkey? ›

Since the current scale was introduced in 2012, Turkey's score has fallen from its highest score of 50 (2013) to its lowest, current score of 38 (2021). When the 180 countries in the Index were ranked by their score (with the country perceived to be most honest ranked 1), Turkey ranked 96 in 2021.

How strong is Turkey's economy? ›

Economy of Turkey
Population84,680,273 (2021)
GDP$853 billion (Nominal, 2022 est.) $3.32 trillion (PPP, 2022 est.)
GDP rank20th (Nominal, 2022 est.) 11th (PPP, 2022 est.)
GDP growth2.8% (2018) 0.9% (2019) 1.8% (2020) 11% (2021) 7.3% (Q1-2022)
38 more rows

Is Turkey financially stable? ›


Despite labor market and economic recovery in 2021, the poverty rate is projected to remain above pre-2019 levels due to persistently high inflation that affects the lowest-income households the most as they spend a higher share of income on items like food that face higher than average inflation.

Does Turkey have any debt? ›

In 2021, the national debt of Turkey amounted to around 171.55 billion U.S. dollars.
Turkey: National debt from 2017 to 2027 (in billion U.S. dollars)
CharacteristicNational debt in billion U.S. dollars
10 more rows
23 Jun 2022

Why is Turkey in debt? ›

Turkey has enjoyed strong economic growth over the last 20 years. Unfortunately, much of this expansion has been driven by debt-fueled infrastructure spending. This excessive debt accumulation has had significant repercussions that have created severe imbalances in Turkey's economy.

Who is hurt by inflation most? ›

Inflation is at a 40-year high, but it's impacting everyone differently. Inflation hurts poor people and those on fixed incomes the most. Inflation helps borrowers and investors in stocks, real estate, and commodities.

Which country is inflation free? ›

In 2021, Samoa ranked 1st with a negative inflation rate of about 3.02 percent compared to the previous year.
The 20 countries with the lowest inflation rate in 2021 (compared to the previous year)
CharacteristicInflation rate compared to previous year
12 more rows
27 Jul 2022

Who benefits from inflation? ›

Inflation Can Also Help Lenders

On top of this, the higher prices of those items earn the lender more interest. For example, if the price of a television increases from $1,500 to $1,600 due to inflation, the lender makes more money because 10% interest on $1,600 is more than 10% interest on $1,500.

Will Turkey be hard to find this year? ›

Expect a turkey shortage of 20% for Thanksgiving 2022.

Avian flu has killed more than 45 million birds since 2022 started, and numbers aren't slowing down. Overall turkey production is down due to the bird flu. Poultry industry leader Hormel is predicting they'll have 20% fewer turkeys available through early 2023.

Is Turkey rich in oil? ›

About 3 million tons of oil is produced each year, about 7% of consumption, and there are about 50 million tons of producible reserves. Almost all oil is imported: mostly from Iraq, Russia and Kazakhstan.

Why is there a Turkey shortage in 2022? ›

Avian influenza and inflation have led to a turkey shortage and higher turkey prices for ... [+] (Photo by James Carbone/Newsday RM via Getty Images). Thanksgiving 2022 is less than a week away, and it's time to talk turkey.

Which country is No 1 poor country? ›

Burundi is the world's poorest country followed by Central African Republic, DR Congo, South Sudan and Somalia as the poorest. The richest countries are Luxembourg, Singapore, Ireland, Qatar and Switzerland. Soberingly, 19 of the 20 poorest countries are all located in Africa.

Is Turkey considered 3rd world? ›

Examples of second-world countries by this definition include almost all of Latin and South America, Turkey, Thailand, South Africa, and many others.

What is the poorest country in the? ›

The Poorest Countries in the World
  • Somalia: GDP per capita of USD 303 in 2026. ...
  • South Sudan: GDP per capita of USD 441 in 2026. ...
  • Sierra Leone: GDP per capita of USD 532 in 2026. ...
  • Malawi: GDP per capita of USD 606 in 2026. ...
  • Central African Republic: GDP per capita of USD 624 in 2026.
11 Oct 2022

Who is Turkey's greatest ally? ›

Since the Cold War, Turkey's most important ally has been the United States, which shared Turkey's interest in containing Soviet expansion.

Does Turkey have good relations with Russia? ›

As a close partner of both Russia and Ukraine, Turkey is actively attempting to broker a peaceful solution to the 2022 Russian invasion of Ukraine, and has hosted a number of high-profile negotiations between the two countries.

Why is Turkey so important to the US? ›

Turkey contributes to international security alongside U.S. forces in Europe, the seas bordering Somalia, and in the Mediterranean. Turkey borders Greece, Bulgaria, Georgia, Armenia, Azerbaijan, Iran, Iraq, and Syria, and is a key partner for U.S. policy in the surrounding region.

Is Turkey in financial trouble? ›

The 2018–2022 Turkish currency and debt crisis (Turkish: Türkiye döviz ve borç krizi) is an ongoing financial and economic crisis in Turkey.

Is Turkey living in poverty? ›

Turkey poverty rate for 2019 was 10.20%, a 1.7% increase from 2018. Turkey poverty rate for 2018 was 8.50%, a 0.2% decline from 2017. Turkey poverty rate for 2017 was 8.70%, a 0.8% decline from 2016.
Turkey Poverty Rate 1987-2022.
Similar Country Ranking
Country Name% Under US $5.50 Per Day
18 more rows

What rank is Turkey in the world? ›

Turkey ranks number 17 in the list of countries (and dependencies) by population. The population density in Turkey is 110 per Km2 (284 people per mi2). The median age in Turkey is 31.5 years.

Is Turkey a strong military power? ›

Turkey has the second largest armed forces in NATO after the United States.

What is Turkey's ranked in military power? ›

For 2022, Turkey is ranked 13 of 142 out of the countries considered for the annual GFP review. It holds a PwrIndx* score of 0.1961 (a score of 0.0000 is considered 'perfect').
Armored Vehicles13,270
Self-Propelled Guns956
Towed Artillery1,189
1 more row
2 May 2022

Is Turkey a good place to live? ›

Living in Turkey is a dream of many. Turkey has beautiful natural landscapes, a rich history, delicious cuisine, an interesting culture full of unique traditions, and kind people all around – all mixed with a warm and pleasant climate that is perfect for living.

Which country is free from debt? ›

These are called debt-free countries.
Countries with the Lowest National Debt.
S.NoCountriesDebt to GDP ratio
4.Democratic Republic of Congo15.2%
4 more rows

What country is the most in debt? ›

Japan, with its population of 127,185,332, has the highest national debt in the world at 234.18% of its GDP, followed by Greece at 181.78%.

Which country owns the most debt? ›

The US placed in the top 10 for debt and credit-related searches, government debt, and credit-card ownership. The countries with the highest level of household debt based on OECD data are: Norway in first place, followed by Denmark and the Netherlands.

Who paid Ottoman debt? ›

With the Paris Treaty of 1933, Turkey decreased this amount to its favour and agreed to pay 84.6 million liras out of the remaining total of 161.3 million liras of Ottoman debt. The last payment of the Ottoman debt was made by Turkey on 25 May 1954.

Is Turkey a friendly country? ›

Turkey is a welcoming and friendly country with an ancient history, fascinating sea and mountain landscapes.

Does China have more debt than us? ›

While this number may seem large, the total amount of U.S Treasuries outstanding is more than 30 trillion dollars. And, China isn't even the largest foreign holder of American debt.

How do the rich get richer during inflation? ›

So borrow…massively. Inflation transfers wealth from lenders to borrowers. Lenders are paid back with diluted dollars. Inflation also redistributes wealth from old to young.

Does inflation hurt rich people? ›

In contrast, inflation reduced the real income of the very rich by about $600,000, while boosting their wealth by less than $500,000. In net terms, inflation has benefited the middle class and adversely affected the very rich.

What items are hit hardest by inflation? ›

Inflation is making almost every item consumers buy more expensive, but there are clear places where price pressures are salient: Food and energy.
  • Groceries: Eggs, chicken, milk. ...
  • Energy: Gasoline and some utilities. ...
  • Personal care — and not just for people. ...
  • Rent.
5 Jul 2022

Will inflation cause housing crash? ›

At the end of the day, buyers are going to feel inflation's impact, but it's unlikely to cause a crash or any drastic shift in the market. If you're hoping to buy a home and want to gauge how inflation and higher rates will influence your goals, get in touch with a mortgage professional in your area.

Where do you escape from inflation? ›

Mortgage-backed securities (MBS) and collateralized debt obligations (CDOs) are risky choices but tend to perform well under inflationary pressure. Investment real estate is traditionally a safe haven but should be approached cautiously in 2022 and 2023 given the unsettled state of the industry.

What should I do with money now? ›

12 best investments right now
  • High-yield savings accounts.
  • Certificates of deposit (CDs)
  • Money market funds.
  • Government bonds.
  • Corporate bonds.
  • Mutual funds.
  • Index funds.
  • Exchange-traded funds (ETFs)
27 Sept 2022

Why does Turkey have 80% inflation? ›

Turkish inflation exceeded 80% for the first time since September 1998, as policies that prioritized economic growth and cheap lending exact a toll on the lira and price stability.

Why is Turkey having an economic crisis? ›

The crisis was caused by the Turkish economy's excessive current account deficit and large amounts of private foreign-currency denominated debt, in combination with President Recep Tayyip Erdoğan's increasing authoritarianism and his unorthodox ideas about interest rate policy.

Why are interest rates so high in Turkey? ›

Why is Turkey's interest rate so high? Interest rates are relatively high in Turkey because of soaring inflation, which surpassed 83% in September.

Is Turkey suffering from hyperinflation? ›

Banks in the Gulf Cooperation Council — that's Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — with Turkish subsidiaries had to adopt “hyperinflation reporting” in the first half of 2022, Fitch wrote this week, as cumulative inflation in Turkey over the last three years surpassed a whopping ...

What's the inflation rate in Russia? ›

For 2021, an inflation rate of 6.7% was calculated. During the observation period from 1993 to 2021, the average inflation rate was 63.3% per year. Overall, the price increase was 371,892.06%. An item that cost 100 rubels in 1993 costs 371,992.06 rubels at the beginning of 2022.

Will Turkish lira go up or down in 2022? ›

The USD/TRY exchange rate moved to the 11 level in late December as the lira attempted to rebound from the crash, but has resumed its decline in 2022, with the pair returning to the record 18 mark, trading at 18.6 as of 21 November.

Which country has the highest interest rate in the world? ›


Is it a good time to invest in Turkey? ›

Experts predict that the Turkish real estate market will grow at an annual rate of 8% between 2022 and 2027.

Is Turkey a good country to invest? ›

To sum up, the growing economy, high youth and workforce rates, increasing value of foreign currencies, amazing geographical point, tax exemptions on foreigners makes Turkey a very attractive place for investors. Consequently, it is really worth investing in Turkey.

How can you protect yourself from hyperinflation? ›

Here's where experts recommend you should put your money during an inflation surge
  1. TIPS. TIPS stands for Treasury Inflation-Protected Securities. ...
  2. Cash. Cash is often overlooked as an inflation hedge, says Arnott. ...
  3. Short-term bonds. ...
  4. Stocks. ...
  5. Real estate. ...
  6. Gold. ...
  7. Commodities. ...
  8. Cryptocurrency.

Are we heading for hyperinflation? ›

Looking at 2022, there's probably no need to panic. Yes, increasing inflation can lead to pecuniary measures but hyperinflation is essentially a situation where currency is meaningless. As things currently stand, hyperinflation seems unlikely.


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