Inflation will fall after May: Şimşek

ANKARA

Türkiye’s annual inflation will begin to decline sharply “in line with our predictions” after it reaches peak in May, Finance Minister Mehmet Şimşek has said.

His remarks came after the data from the Turkish Statistical Institute (TÜİK) showed on May 3 that the annual inflation rate accelerated from 68.5 percent in March to 69.8 percent in April.

Consumer prices, which rose 3.16 percent in March, advanced 3.18 percent month-on-month in April.

Inflation in April was in line with expectations, Finance Minister Mehmet Şimşek wrote on X, after the official data was released.

After annual inflation reaches its peak in May, it will begin to decline sharply in line with “our predictions,” the minister said.

“Thanks to the economic program, the balancing of the economy and the decreasing current account deficit, the re-instated budget discipline, the strong increase in international inflows…support the fight against inflation,” Şimşek added.

With disinflation, the improvement in expectations will become more evident, which will support the decline in inflation, according to the minister.

The Central Bank’s inflation forecast for 2024 is 36 percent, while it predicts that the annual inflation rate will be 14 percent at the end of 2025.

Prices have increased by 18.7 percent compared with the end of 2023, according to TÜİK data.

In the face of rampant inflation, the Central Bank began to hike its key interest rate — the one-week repo auction rate — in June 2023, gradually taking it from 8.5 percent to 50 percent. Last month, it kept the policy rate unchanged.

Earlier this week, Fatih Karahan, governor of the Central Bank said that "as a team they are closely monitoring monthly price developments.”

He reiterated that the tight monetary policy stance will be maintained until a significant and durable decline in the underlying trend of monthly inflation is achieved and inflation expectations converge to the projected forecast range.

 Monthly price increases

Alcoholic beverages and tobacco product prices surged 9.6 percent month-on-month, which brought the annual rise for those products to 78.5 percent.

Restaurant and hotel prices increased by 4.7 percent monthly, while the month-on-month increase in clothing prices was 4.58 percent.

Food and non-alcoholic beverage prices climbed 2.78 percent for an annualized increase of 68.5 percent.

Transport costs rose 2.8 percent month-on-month and 80.4 percent year-on-year.

The C-index, which excludes volatile energy, food, alcoholic beverages and gold prices, rose 3.56 percent monthly in April, after rising 3.52 percent in March. The annual increase in this core inflation indicator quickened from 75.2 percent to 75.8 percent.

TÜİK also reported on May 3 that producer prices increased by 3.6 percent in April. The monthly increase in producer prices was 3.29 percent in March.

The annual rise in producer prices accelerated from 51.47 percent to 55.66 percent.