Canada Global (Web News) Turkey’s inflation rate for December came in lower than expected, with annual inflation at 44.38% and monthly inflation at 1.03%, according to data released on Friday. This followed the central bank’s recent decision to initiate a monetary easing cycle after a prolonged effort to control inflation.
The Turkish Statistical Institute reported a decline in monthly inflation from November’s 2.24%, while annual consumer price inflation (CPI) was 47.09% in November. The main contributors to the annual increase were education, housing, and restaurant costs, while furniture and telecom prices saw the largest monthly rise.
A Reuters survey had predicted annual inflation to drop to 45.2% and the monthly rate to 1.61%, but the December figures exceeded expectations, aligning with the central bank’s year-end target of 44%. The annual rate for December marked the lowest inflation level since mid-2023.
The central bank, which had maintained its interest rate at 50% since March, recently reduced it by 250 basis points to 47.5%. This shift follows a tightening phase that began in mid-2023. Officials have stated that monetary policy will be reviewed on a meeting-by-meeting basis, focusing on inflation trends and addressing any significant risks.
Economists anticipate further interest rate reductions as inflation continues to decline. Finance Minister Mehmet Simsek expressed confidence that inflation will align with the year’s targets, supported by fiscal measures, easing rigidity in services inflation, and improving market expectations.
Projections from the Reuters poll suggest annual inflation could fall to 26.5% by the end of 2025, while the central bank forecasts a decline to 21% by the end of 2024. However, price movements in the coming months are expected to reflect adjustments such as the recent 30% minimum wage increase and new-year tax changes.
In December, the domestic producer price index rose 0.4% month-on-month, resulting in an annual increase of 28.52%, further highlighting price pressures in the economy.
