Central Bank lifts 2022 inflation forecast to 42.8 pct

ANKARA

Turkey’s Central Bank has lifted its annual consumer price inflation forecast for 2022 from 23.2 percent three months ago to 42.8 percent.

The bank, which unveiled its quarterly inflation report yesterday, said it also revised upwards its end-2023 forecast from a previous 8.2 percent to 23.2 percent. It expects the annual inflation rate to ease to 8.3 percent at the end of 2024.

Consumer prices increased by 5.46 percent from February to March, the latest inflation data showed. Turkey’s annual consumer price inflation rate, consequently, climbed from 54.4 percent to 61.1 percent.

“We are aware that low-income groups are deeply affected, and we take the matter seriously. Inflation will start to decline after May,” Central Bank Governor Şahap Kavcıoğlu said at the launch of the second edition of this year’s inflation report in Ankara.

Necessary measures are being taken to bring inflation lower, he said, citing subsidies provided for electricity and food. “The government and other stakeholders will take necessary actions depending on the developments.

The stable course of the Turkish lira in the first quarter averted a more negative outlook on inflation, the Central Bank said in the report.

With the liraization strategy, while the sensitivity to the exchange rate in inflation and pricing behavior is taken into account in the short term, structural steps are being taken to strengthen the permanent improvement in the current account balance by supporting production and exports in the medium term, according to the Central Bank.

The steps taken within the scope of the liraization strategy will be used decisively until strong indicators pointing to a permanent decrease in inflation are formed, it said.

Kavcıoğlu noted that the increase in the number of foreign tourist arrivals continues.

“Expectations regarding the tourism sector are positive. There are significant increases in demand and reservations from Europe and the Middle East. We do not foresee problems in the tourism sector, on the contrary, we expect a strong recovery which will have a positive impact on the current account balance,” the governor said.

In its report, the bank reiterated that the monetary policy stance will continue to be determined with the focus on evaluating the sources of the risks to inflation, their permanence and how they can be controlled by monetary policy, targeting sustainable price stability with a solid approach.

The disinflationary effects of monetary policy decisions will become more visible and permanent once the global peace is reestablished and the base effects of inflation are eliminated, it said.