close
close

Turkey says inflation is trending down after hitting 24-year high

Turkey’s annual inflation rate rose more slowly than expected in May but still jumped to a 24-year high, official data showed on Friday, fueled by rising food and energy prices.

The Consumer Price Index (CPI) rose 73.5% in the 12-months to May, up from nearly 70% in April, Turkey’s Statistics Institute (TurkStat) said.

However, the increase was smaller than in previous months, suggesting that price pressures may be easing. Russia’s invasion of Ukraine, which has pushed up gas, oil and grain prices, has exacerbated the situation in import-dependent Turkey.

Treasury and Finance Minister Nureddin Nebati said monthly inflation readings are trending down in a positive sign.

“The fight against inflation will continue to be our top priority in the coming period,” Nebati wrote on Twitter. “We will never allow our citizens to be crushed under the pressure of inflation.”

The strongest annual price increases were in the transport sector at 107.6%, followed by food and non-alcoholic beverage prices at 91.6%, according to data from the statistical institute.

Month-on-month, consumer prices rose nearly 3%, according to TurkStat, compared to a market forecast of 4.8%. The consensus forecast was that annual inflation would rise to 76.55%.

A core index, which excludes the impact of volatile items like food and energy, hit 56%, the data showed.

The domestic producer price index rose 8.76% mom in May, up 132.16% year-on-year.

The latest figure surpassed 2002’s 73.2% and is the highest since October 1998, when annual inflation was 76.6%.

Turkey’s CPI has skyrocketed since last fall when the Turkish lira weakened after the central bank began a 500 basis point easing cycle in September.

Consumer prices have risen despite tax cuts on basic necessities and government subsidies for electricity bills to ease the burden on households.

The government says inflation will fall under its new economic program that prioritizes low interest rates to boost output and exports and maintain a current account surplus.

The lira weakened 0.25% against the dollar to 16.5050, its weakest level since December. The currency fell 44% in 2021 and another 20% this year.

The Central Bank of the Republic of Turkey (CBRT) has revised its inflation forecasts for this year and next mainly due to the rise in commodity prices and supply problems.

A presentation by Governor Şahap Kavcıoğlu in April indicated that inflation would peak at around 70% before June, before falling to 42.8% by the end of the year.

The central bank has kept its benchmark interest rate steady at 14% for five meetings this year and said disinflation will start due to other measures, the so-called base effect and an expected end to the Ukraine conflict.

The daily Sabah newsletter

Keep up to date with what is happening in Turkey, its region and the world.

You can unsubscribe at any time. By registering, you agree to our Terms of Use and Privacy Policy. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Leave a Comment