In the fight against the enormously high inflation, Turkish President Recep Tayyip Erdogan is reducing VAT on various everyday products. Erdogan announced on Monday that cleaning agents, toilet paper, napkins and baby diapers would only cost eight percent instead of the previous 18 percent.
Consumer prices in Turkey rose 54.5 percent in February, the highest in 20 years. The fall in the local currency, the lira, and rising food and energy prices contributed to this.
Nevertheless, and despite the additional pressure on prices caused by the war in Ukraine, the Turkish central bank did not raise its key interest rate. She left it at 14 percent in her last decision in mid-March. Erdogan is a declared opponent of interest rate hikes.
However, economists consider it to be the appropriate antidote, as it could make the lira more attractive again. But Erdogan wants to use cheap credit to boost production and exports, which in turn should create more employment.
