LUCKNOW (CoinChapter.com) — Inflation in Turkey saw its steepest monthly increase since August, jumping 6.7% in January 2024, according to data released Monday by the Turkish Central Bank. The consumer price index rose 64.86% in January on an annual basis, up slightly from 64.77% in December.
Health, Hotels, and More Hit by Double-Digit Increases
The price hikes in January were largely driven by substantial increases in services costs, especially in sectors like health, hotels/restaurants, and miscellaneous goods and services, which saw monthly rises of 17.7%, 12%, and over 10%, respectively. Meanwhile, clothing and footwear were the only sectors that saw prices decrease, which fell 1.61%.
Essentials like food, beverages, and transport continued their price rise, increasing 5-7% month-on-month. Furthermore, housing saw an increase of 7.4% since December.
Analysts believe these jumps are largely due to the new minimum wage hike brought by the Turkish government in January 2024. This 100% wage hike raises the monthly minimum pay to 17,002 lire ($556). This income boost is filtering through into higher costs for businesses and consumers.
Over the past eight months, the Central Bank of Turkey has tried controlling inflation through aggressive interest rate hikes totaling 3,650 basis points since May 2023. The latest hike of 250 basis points on Jan. 25 brought the key rate to 45%.
The central bank’s recent rate hikes follow several years of unconventional policies under which Ankara refused to raise rates despite runaway inflation. Consequently, the Turkish lira has plunged 38% against the dollar this year.
Turks Flock to Cryptocurrencies Amid Rising Inflation
As the lira plummets in value and the cost of living surges, Turks lose faith in the lira and traditional financial tools. Instead, many see cryptocurrencies, with their decentralized nature untouched by central bank policies, as a trusted means to preserve wealth.
According to Binance CMO Yi He, crypto adoption rates in Turkey have reached record highs. In an interview, He stated that Turkish users’ interest and activity in crypto trading have surged significantly, with trading volumes for the Turkish Lira (TRY) spiking 550% on the Binance platform in the past few months. Nearly 6% of Turks now own Bitcoin — the highest rate in Europe.
Turkey has emerged as a global leader in cryptocurrency adoption and trading activity. According to a report by Chainalysis, Turkey ranked 4th globally over the last year with approximately $170 billion in total crypto transaction volumes.
