Turkish Households Grow Pessimistic as Inflation Remains High
Consumer confidence in Turkey fell in April, dropping 2.3% from the previous month to 83.9 points, according to data released Tuesday by the Turkish Statistical Institute. The decline reverses a modest rebound in March, when the index had increased by 4.6%.
The consumer confidence index measures household sentiment toward the economy, with readings below 100 indicating widespread pessimism about future financial conditions. April’s decline reflects persistent concerns among consumers, despite recent monetary policy shifts intended to stabilize the country’s economy.
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Just days before the data release, the Central Bank of the Republic of Turkey raised its key interest rate by 350 basis points—from 42.5% to 46%—marking a return to tightening after briefly entering an easing phase late last year. The latest move is aimed at curbing inflation, which stood at 38.10% year-on-year in March.
Since June 2023, Turkish monetary authorities have significantly hiked interest rates, lifting the benchmark rate from 8.5% to as high as 50% by March 2024. The rapid policy changes reflect the government’s efforts to regain economic stability after years of price volatility and currency devaluation.
The combination of high inflation and sharply rising borrowing costs has strained household budgets, contributing to declining consumer sentiment. Economists view consumer confidence as a critical gauge for future spending behavior and economic growth.
Turkey’s economy has been under pressure from both internal and external shocks, and while authorities have taken aggressive steps to stabilize conditions, consumer sentiment suggests the road to recovery may remain bumpy.
