Annual inflation rate slows to 61.4 percent in October

ANKARA

The annual inflation rate slowed from 61.5 percent in September to 61.36 percent in October, data from the Turkish Statistical Institute (TÜİK) have shown.

The monthly inflation also continued to ease. Consumer prices rose 3.43 percent last month, down from the 4.75 percent and 9.1 percent increases recorded in September and August, respectively. The monthly inflation was 9.5 percent in July.

Clothing prices soared 13.73 percent last month from September, while housing costs rose 7.5 percent for an annualized increase of 26 percent. Hotel and restaurant prices were up 3.5 percent monthly.

Food and non-alcoholic beverage prices rose by 3.2 percent in October compared with September, while the year-on-year increase came in at 71.99 percent.

Transport costs in Türkiye declined by 0.18 percent last month.

The B index, one of the Central Bank’s favorite core inflation indicators, which excludes the prices of unprocessed food, energy, alcoholic beverages, tobacco and gold, rose 3.48 percent in October, easing from the 5.1 percent recorded in September.

The month-on-month increase in the C index, which excludes energy, food, tobacco and gold, also slowed from 5.3 percent from 3.7 percent.

This week, the Central Bank raised its year-end inflation forecast from a previous 58 percent to 65 percent, while lifting the end-2024 forecast from 33 percent to 36 percent.

The bank revised downward the year-end forecast for 2025 from 15 percent to 14 percent.

Speaking at the presentation of the quarterly inflation report, Central Bank Governor Hafize Gaye Erkan reiterated that they expect a decline in the underlying trend of monthly inflation.

“Nevertheless, we expect that there will be temporary rises in the monthly inflation path in November, January and May owing to several factors that fall outside the scope of the monetary policy,” she said.

The peak of annual inflation will be recorded in May 2024 due to base effects stemming from natural gas prices, according to the bank’s governor.

“In the second half of 2024, we expect a strong and uninterrupted disinflationary process to begin as the cumulative effects of the monetary tightening will begin to take hold.”

Erkan reiterated that the bank will continue monetary tightening until significant improvement in the inflation outlook is observed.

The Central Bank hiked its policy rate, the one-week repo auction rate, by 500 bps last month to 35 percent.

Since June, the bank has lifted the policy rate by a cumulative 2,650 bps.