The residents of Istanbul are in despair: Inflation in the city is at 99.9%

Inflation in Turkey’s biggest city, Istanbul, accelerated to 99.9% last month, according to the city’s main business association.

Annual price increases jumped from 91.1% in July, according to the Istanbul Chamber of Commerce (İTO) in its price index published on Thursday. On a monthly basis, the price rose 2.29%, it said.

Istanbul inflation is traditionally used by economists as a gauge of inflation at the national level, which is published later each month. However, the differences between the two measures have widened significantly in recent months – official inflation for Turkey at the national level accelerated to 79.6% in July.

In May and June, the difference between Istanbul and Turkey’s official inflation rate was 9.9 percentage points and 13.8 percentage points, respectively.

Rising consumer prices have hit Turkey’s population of 84 million hard, with little hope of improvement as citizens struggle against high energy and food prices and a sharp devaluation of the lira, which has lost 44% of its value in 2021 and about 27% this year.

Turkish authorities raised the price of gas and electricity for households by 20% on Thursday.

Critics blame the unorthodox economic policies of Turkish President Recep Tayyip Erdogan, who refused to raise interest rates in time to reduce inflation and ordered the Central Bank (TCMB) to cut borrowing costs. The bank shocked investors last month by cutting its benchmark interest rate to 13% from 14%.

The independent inflation group ENAG, which is made up of academics in Turkey and abroad, measured Turkey’s inflation rate at 176% in July. It claims to use essentially the same calculation methods as the Turkish Statistical Institute.

The statistics office is due to release August inflation data on Monday. A Reuters poll published this week predicted Turkey’s official inflation rate could rise to 81.2 percent.

Petros Kranias