Inflation in Turkey expected to hit 70% in April

Due to the impact of the Russia-Ukraine conflict and rising commodity prices, Turkey’s annual inflation rate is anticipated to surge to 68 percent in April and only fall to 52 percent by the end of the year, according to a Reuters poll released on Thursday.

 

Turkey’s consumer price index has risen since last autumn as the lira has depreciated following the central bank’s launch of a 500 basis point easing cycle, which President Tayyip Erdogan has long advocated.

 

Despite tax cuts on essential items and government subsidies for some electricity bills to lessen the stress on household budgets, inflation rose to 61.14 percent in March, the highest in 20 years, due to the lira’s decline and rising food and energy prices.

 

In a Reuters poll, the median projection for annual consumer price inflation in April was 68 percent, with forecasts ranging from 64.20 percent to 70.85 percent. The last time annual inflation was this high was in February 2002, when it reached 73.1 percent.

 

Because of the Ukraine crisis, economists expect inflation to stay high for the rest of the year, with the median forecast for inflation at year’s end standing at 52 percent. The year-end result was predicted to be between 43.7 percent and 60 percent.

 

According to the administration, inflation will fall as a result of the new economic plan, which prioritises low interest rates to encourage production and exports while also aiming for a current account surplus.

 

Because of rising commodity prices and supply concerns, the Turkish central bank raised up its inflation predictions for this year and next. According to Governor Sahap Kavcioglu’s address on Thursday, inflation will peak above 70% before June and then decline to single digits by the end of 2024.

 

In four meetings this year, the central bank retained its key policy rate at 14 percent and stated that liraization in the market would be prioritised in measures and policy moves.

 

According to a union confederation, food costs in Ankara, Turkey’s capital, jumped by 8.02 percent in April.

 

CPI was predicted to rise by 6 percent month over month, with projections ranging from 3.50 percent to 7.8 percent.

 

On May 5, the Turkish Statistical Institute will issue April inflation figures at 0700 GMT.