President Recep Tayyip Erdoğan on Wednesday acknowledged the challenges over the surging costs of living but reiterated his commitment to long-term economic stability over short-term populist measures.
“We are aware of the issues arising from the high cost of living, but we will address them by ensuring lasting prosperity, not through populist policies,” Erdoğan told his ruling Justice and Development Party’s (AK Party) parliamentary group meeting.
Authorities have been seeking to curb stubbornly elevated inflation and have delivered aggressive monetary tightening since last year’s general and presidential elections, as the government started reversing years of the loose policy.
Inflation reached an annual 75% in May, which officials say marks the peak before a series of interest rate hikes and a relatively stable Turkish lira bring relief.
"We will see the fire of inflation subsiding from the coming months onward," Erdoğan said.
Officials have said more time is needed to see the policy effects and convince society at large.
The government is preparing more fiscal tightening and has already announced a major cut in public expenditure as it moves toward stricter policies.
Since June last year, the country's central bank has gradually lifted its benchmark policy rate to 50% from 8.5% and has said it would "do whatever it takes" to prevent the inflation outlook from deteriorating.
Separately, the government on Wednesday definitely ruled out a mid-year raise in the minimum wage, which the markets were watching to gauge its commitment to fighting inflation.
The country traditionally revises monthly net minimum salary in January but had opted for July hikes for the past two years to ease the pressure on households.
However, the government has said it does not have plans for such a hike this year and will stick to a single, nearly 50% increase for 2024, announced at the beginning of the year.
The central bank has also warned that additional hikes could complicate its efforts to anchor inflation expectations.
“There won’t be an increase,” Labor and Social Security Vedat Işıkhan told reporters at the Parliament in Ankara on Wednesday.
“Our aim is to establish permanent welfare, not a temporary one.”
Işıkhan said the next talks over minimum wages would take place in December.
