Inflation expectations improve, says Finance Minister Şimşek

ANKARA

The positive results of the economic program the government is implementing are reflected in inflation expectations, Finance Minister Mehmet Şimşek said.

The inflation expectations for the end of 2024 declined from 44 percent in April to 43.64 percent in May, the Central Bank’s Survey of Market Participants showed on May 17.

“While the decline in year-end inflation expectations continued, the 12-month ahead expectation fell by 12.1 points compared to October and dropped to 33.2 percent,” Şimşek wrote on the social media platform X.

“The improvement in expectations is very important in breaking the inflation inertia and ensuring permanent price stability,” the minister added.

He reiterated that annual inflation is expected to decline rapidly in the remainder of the year after peaking in May.

“As disinflation begins, expectations will converge to our target faster… We are determined to achieve our goal,” Şimşek said.

The 12-month ahead inflation expectations improved from the previous 35.17 percent to 33.21 percent, while participants lowered their 24-month ahead forecasts from 22.05 percent to 21.33 percent, showed the Central Bank’s monthly survey.

Consumer prices are expected to increase by 3 percent in May.

The annual inflation accelerated from 68.5 percent in March to 69.8 percent in April.

Earlier this month, the Central Bank lifted its inflation forecast from the previous 36 percent to 38 percent for the end of 2024.

The bank, on the other hand, held its inflation forecasts for 2025 and 2026 steady at 14 percent and 9 percent, respectively. The bank expects inflation to stabilize at 5 percent in the medium term.

Meanwhile, participants of the survey kept their GDP growth estimates for 2024 and 2025 unchanged at 3.3 percent and 3.7 percent, respectively.