Turkey's inflation rate nears 50% as its overheating economy puts consumers under strain

While the Bank of England battles rising costs, Turkey is being ravaged by inflation.

Inflation almost touched 50 per cent in July as an overheating economy put consumers under strain, according to the Turkish Statistical Institute.

Consumer prices rose 47.8 per cent last month, a substantial increase from 38.2 per cent in June.

Currently the height of the Turkish summer – hotels and restaurants posted the biggest rises in July, with an 82.6 per cent increase. Food costs jumped by 61 per cent.

Turkey is still in the middle of a cost of living crisis, even as the new economic team that President Recep Tayyip Erdogan appointed in June continues to unwind unconventional policies that were in place for years.

Squeezed: Turkish consumer prices rose 47.8% last month, a substantial increase from 38.2% recorded in June. Pictured: A street seller in Istanbul

Under new finance minister Mehmet Simsek, Turkey has abandoned its costly defence of the lira and allowed it to plummet by a quarter against the euro since the end of May.

Simsek has boosted taxes on a broad range of goods and services, including a 200 per cent increase in petrol taxes, to cool demand and refill government coffers.

Central bank chief Hafize Erkan forecast last week that inflation would reach 58 per cent this year, falling to 33 per cent by the end of 2024 and 15 per cent the following year.

But many economists worry that Erdogan, an opponent of high borrowing costs, will not allow the central bank to raise rates to a sufficient level to cool inflation down.