Rise in inflation caused by increased demand after COVID-19: Turkey's Central Bank

Duvar English

The removal of certain preventive measures imposed to combat the coronavirus (COVID-19) pandemic and the ensuing demand were the primary factors influencing inflation in June, according to a report from Turkey's Central Bank released on July 6.

In the beginning of June, restaurants and other types of businesses reopened for service after a nearly three-month period of closure following the first case of the novel coronavirus that was announced in Turkey on March 11.

After a series of weekend curfews imposed to combat the spread of the virus, the number of daily new cases dropped to under 1,000, and the government opted to cease the curfews and allow certain establishments to reopen, providing relief for Turkey's battered economy and a service industry that was in serious trouble after being shut down for almost three months.

Inflation in the service sector was due to demand, while inflation in energy prices resulted from a global rebound in oil prices. Basic goods surged in price due to both demand and the weakened Turkish lira, which started the year at 5.94 to the dollar but has slipped to its current rate of 6.85.

According to the Central Bank's report, consumer prices went up 1.13 percent in June, rising 1.23 points and increasing 12.62 percent annually. Service sector price increases were observed most significantly in transportation, which practically ground to a halt in the midst of the pandemic. Plane tickets increased 12.39 percent while intercity bus tickets climbed by 23.59 percent annually last month.

Food and non-alcoholic drinks increased by 12.93 percent annually in June, while energy prices rose by 9.12 percent.