Turkey's annual inflation rose to 68.5% for the month of March, an increase on February's 67.1% inflation read, according to the Turkish Statistical Institute's report released Wednesday.
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Much of the inflation in recent months stems from a significant increase to the minimum wage that Turkey's government mandated for 2024. The minimum wage for the year rose to 17,002 Turkish lira (around $530) per month in January, a 100% hike from the same period a year prior.
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Analysts note that with Turkey's local elections, which took place on March 31, out of the way, pushing ahead with tighter monetary policy will likely be easier. The vote for municipal leaders across the country, which took place Sunday, saw Turkey's opposition party deal a historic blow to Turkish President Recep Tayyip Erdogan's ruling AK Party, winning the country's five largest cities and several rural areas as well.
Economic pain and steep living cost increases for ordinary Turks over the last several years played a major role in the results, political observers said.
Exercising tight control over the central bank, Erdogan for the last few years refused to raise rates, calling them "the mother of all evil" and insisting, against economic orthodoxy, that lowering rates was the way to cool inflation. This was despite declining foreign currency reserves and a rapidly weakening Turkish lira, which has lost some 82% of its value against the dollar in the last five years.
Only after appointing a new finance and central bank team in May 2023 did the central bank stage a turnaround in policy, suggesting greater independence at the bank from the executive branch of Turkey's government. But the political loss for Erdogan's party in the March local elections could make his future moves more unpredictable, some analysts say.
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