According to a Reuters poll released, annual inflation in Türkiye is forecast to decline drastically to 66.8% in December as a result of a favorable base effect, but only to 43.2% by the end of 2023. Monthly price increases are also projected to be high.
As Turks cast their ballots in close presidential and legislative elections next year, the projection for the end of 2023, which is almost twice as high as the government’s, increases the possibility of the ongoing cost of living pressures.
After growing for 17 months, inflation reached a 24-year high in October, mostly as a result of President Tayyip Erdogan’s unconventional low interest-rate monetary strategy and the ensuing currency crisis in 2016.
The annual inflation rate decreased marginally in November, and it is anticipated that the dip will become more significant in December and in the first quarter of the year when the increase in prices during the same period last year will provide some respite.
The consensus prediction for annual December inflation in the Reuters survey of 12 analysts was 66.8%. The range of predictions, which broadly matched the government’s prediction of 65%, was 64.60% to 69.1%.
With a wide range between 1.40% and 4.10%, the median forecast for monthly price growth is 2.7%, and this trend is still very pronounced.
Due to changes made to the car special-consumption tax bands in late November, the trajectory of the auto and food prices might cast doubt on the inflation print for December, according to Deniz Cicek, the economist at QNB Finansbank.
The central bank cut its policy rate by 500 basis points to 9% since August despite skyrocketing prices, blaming a downturn in the economy. Erdogan’s economic blueprint, which prioritizes exports, output, investments, and jobs, were all part of the loosened measures.
In 2021, the lira lost 44% of its value versus the dollar, most of it during the December currency crisis brought on by the rate cuts of the previous year. To reach record lows this year, it lost another 30%, but for the past few months, it has remained largely constant.
According to Ankara, the scheme would enable Türkiye’s persistent current account deficits to change into surpluses, which will, in turn, cause inflation to permanently decline.
But according to the median prediction of eight analysts in a Reuters survey, with predictions ranging between 33% and 48%, inflation will only fall to 43.2% by the end of 2023.
According to Ankara’s medium-term economic estimates, inflation will reach 24.9% by the end of 2023, and a current account surplus won’t occur for at least the following three years.
At 7:00 GMT on January 3, the Turkish Statistical Institute will release its report on December’s inflation rates.
