Annual inflation edges up to 64.8 percent

ANKARA

Türkiye’s annual consumer price inflation rate quickened from 61.98 percent in November to 64.77 percent in December, the data from the Turkish Statistical Institute (TÜİK) showed on Jan. 3.

This was slightly below the Central Bank’s revised forecast of 65 percent for the end of 2023.

“We are meeting our revised targets,” Finance Minister Mehmet Şimşek wrote on the social media platform X, commenting on the inflation numbers.

The annualized core indicators are consistent with the 2024 targets, he added.

“We predict that growth and current account deficit will be in line with our targets, while the budget deficit for 2023 will be well below our target,” Şimşek said.

Predictability increased thanks to the realistic and consistent targets set out in the economic program, the minister added.

“We will continue to do whatever is necessary to achieve the targets of our program, especially inflation, in 2024,” Şimşek said.

The data from TÜİK showed that the downward trend in monthly inflation continued in December.

Consumer prices increased by 2.93 percent last month, after rising 3.3 percent in November and 3.4 percent in October. The monthly increase was 9.5 percent in July last year.

Most economists had expected consumer prices to rise 3 percent in December.

The annual inflation was driven mainly by hotel and restaurant prices, which rose more than 93 percent last year. Education and health costs increased 82 percent and 79.6 percent, respectively.

In December, housing prices were up 4.97 percent month-on-month for an annualized increase of 40.4 percent.

Food and non-alcoholic beverage prices advanced 4.8 percent from November, while the annual increase for those items was 72 percent.

Clothing prices declined 1.3 percent and transportation costs fell 0.14 percent.

The C-index, which excludes volatile energy and food prices, rose by 2.31 percent month-on-month in December after increasing 1.96 percent in November.

In the summary of the Monetary Policy Committee meeting released last month, the Central Bank said that monthly inflation will rise in January due to wage adjustments, particularly the minimum wage, and items with a high tendency for time-dependent price setting.

The minimum wage was increased by 49 percent to 17,002 Turkish Liras ($578) for millions of workers for 2024.

“This rise in monthly inflation is expected to slow down in February and beyond, and hover close to the decline in the underlying trend of inflation in the first half of the year,” the bank said.

In its inflation report released in November, the bank forecast that the annual inflation will be 36 percent at the end of 2024.

The government aims to lower inflation to 15 percent in 2025 and further down to 8.5 percent in 2026.