Annual inflation drops to 71.6 percent in June

ANKARA

Consumer prices rose by 1.64 percent monthly in June, bringing the annual inflation rate to 71.6 percent, down from 75.45 percent in May, data from the Turkish Statistical Institute (TÜİK) have shown.

The monthly inflation was lower than the market expectation for a 2.2 percent increase in consumer prices. This was also the lowest monthly inflation recorded in 2024.

“The disinflation process has begun,” Finance Minister Mehmet Şimşek said, commenting on the latest inflation numbers, reiterating that the economic program will be implemented with determination until price stability is achieved.

The inflation trend implied by the annualized seasonally adjusted three-month moving average is consistent with the year-end target, Şimşek wrote on social media platform X.

“The success we have achieved in many areas such as financial stability, sustainable current account deficit, reserve accumulation and exit from the gray list will also be evident in disinflation, which is the main goal of our program,” the minister said.

In May, the Central Bank lifted its inflation forecast from the previous 36 percent to 38 percent for the end of 2024. In the medium-term program, the government’s inflation target for 2024 is 33 percent.

Housing prices advanced 3.8 percent month-on-month in June, bringing the annualized increase to 94.7 percent.

Food and non-alcoholic beverage prices increased by 1.8 percent monthly and 68.1 percent annually, showed data TÜİK released on July 3.

Education prices rose 3.5 percent, while the monthly increase in restaurant and hotel prices was 3.1 percent.

In the statement regarding its interest rate decision in June, when it kept its main policy rate unchanged at 50 percent, the Central Bank warned that the high level of and the stickiness in services inflation, inflation expectations, geopolitical risks, and food prices keep inflationary pressures alive.

Communication costs were 2.5 percent higher in June compared with the previous month.

Clothing and transportation prices declined by 0.6 percent and 0.13 percent month-on-month, respectively.

The C-index, one of the Central Bank’s favored core inflation indicators, which excludes the prices of energy, food and non-alcoholic beverages, gold and tobacco products, increased 1.73 percent in June month-on-month, easing from the previous month’s 3.76 percent.

The monthly rise in the B-index, which excludes unprocessed food, energy, alcoholic beverages and tobacco products and gold, eased from 3.8 percent to 1.9 percent.

The annual increases in the C and B indices were 71.4 percent and 70.4 percent, respectively, below the headline CPI inflation’s year-on-year rise of 71.6 percent.