Annual inflation eases to 38 percent in June

ANKARA

Türkiye’s annual inflation rate slowed further from 39.59 percent in May to 38.2 percent in June, the Turkish Statistical Institute (TÜİK) has said.

This marked the lowest annual inflation rate in 18 months.

Consumer prices advanced 3.92 percent in June from May, when the monthly inflation was 0.04 percent, pushed down by a temporary offer of free gas to households.

Prices increased by 19.77 percent compared with the end of 2022, TÜİK data showed. The government takes the six-month inflation into account when it decides about an increase in civil servants’ salaries and pensions.

Food and non-alcoholic beverage prices rose by 3 percent month-on-month, for an annualized increase of 53.9 percent.

Housing prices were up 2.99 percent last month from May, while transport costs increased by 7.96 percent. The monthly increase in clothing and health services prices were 1.45 percent and 1.2 percent, respectively.

Restaurant and hotel prices rose by 4.3 percent month-on-month.

In a statement after Monetary Policy Committee meeting on June 22, the Central Bank said that the committee decided to begin the monetary tightening process in order to establish the disinflation course as soon as possible, anchor inflation expectations and control the deterioration in pricing behavior.

At the June meeting, the bank lifted the policy rate - the one-week repo auction rate - from 8.5 percent to 15 percent.

“Recent indicators point to an increase in the underlying trend of inflation. The strong course of domestic demand, cost pressures and the stickiness of services inflation have been the main drivers. In addition to these factors, the committee anticipates that the deterioration in pricing behavior will put further pressure on inflation,” the bank said.

TÜİK data released on July 5 also showed that producer prices rose by 6.5 percent in June, bringing the annual increase to 40.52 percent from 40.76 percent in May.