Turkey Inflation Surges: Second Highest in G-20

Inflation has become Turkey's defining economic challenge in 2025. At 32.95%, the country now has the second-worst inflation rate among G-20 nations, trailing only Argentina. This alarming figure reflects the consequences of unorthodox monetary policies that have earned the label "Erdoganomics." The data shows inflation trending upward with no meaningful signs of stabilization, raising serious concerns about Turkey's economic trajectory.

Chart Analysis: Relentless Price Growth

Economist Steve Hanke recently highlighted Turkey's inflation crisis, linking it directly to the country's unconventional economic policies. The chart data tells a concerning story. Inflation has been climbing steadily, breaking past the 30% threshold with momentum that suggests deeper structural problems rather than temporary fluctuations. Short-term dips have consistently been followed by stronger rebounds, and there's no technical evidence suggesting the trend will reverse anytime soon without major policy changes.

What's Driving Turkey's Inflation?

Erdoganomics and Interest Rate Policy: President Erdogan has rejected conventional economic thinking, maintaining that high interest rates cause inflation rather than control it. This approach has kept rates artificially low, fueling demand while undermining price stability.

Currency Weakness: The Turkish lira's ongoing depreciation against major currencies has made imports increasingly expensive, driving up costs for everything from energy to food to consumer goods.

Global Commodity Pressures: Rising global energy and commodity prices have hit Turkey particularly hard, worsening the trade deficit and transmitting price shocks directly into the domestic economy.

Policy Instability: Frequent changes in central bank leadership and inconsistent monetary policy have eroded investor confidence, accelerating capital flight and further weakening the currency.

The comparison with other major economies is stark. Argentina is the only G-20 country with higher inflation, exceeding 100%. Meanwhile, the U.S. and Eurozone hover around 2–3%, and even other emerging markets like Brazil and India face inflation well below Turkey's levels. This puts Turkey in an isolated and precarious position among the world's largest economies.