Just before the Turkish Statistical Institute (TurkStat) releases inflation statistics on Thursday, forecasts showed that Turkiye’s annual inflation rate is expected to decline.
Inflation in Istanbul, the country’s largest city and one of its most important economic centers, continued to rise month-on-month, but fell year-on-year.
Turkiye’s annual inflation rate is expected to continue falling in September, falling below the central bank’s policy rate of 50% for the first time since 2021, according to a Reuters poll on Monday.
The median forecast of 19 economists predicted annual inflation would be 48.3% in September, down from 51.97% in August.
The expected range was 47.8%-49.1%. On a month-on-month basis, inflation is expected to rise to 2.2%, with forecasts ranging between 2% and 2.8%.
Monthly inflation was high in January and February, but slowed to around 3.2% in March and April, mainly due to the large minimum wage hike and new year price updates. After declining in June, the inflation rate rose to 3.23% in July on the back of mid-year price adjustments.
The monthly inflation rate in August was 2.47%, the first price adjustment in almost two years, due to the rise in natural gas prices for households.
Turkiye’s annual consumer inflation rate slowed to 71.60% in June. In August, it fell to 51.97%, slowing down from 61.78% in July.
At the same time, Istanbul’s inflation rate increased by 3.9% on a monthly basis in September last year, while the annual inflation rate decreased to 59.18%.
Istanbul Chamber of Commerce and Industry (ITO) announced on Tuesday that Istanbul’s salaried living cost index, which reflects movements in retail prices, rose by 3.90% month-on-month, while the wholesale price index, which tracks movements in wholesale prices, increased. , up 4.67%.
According to the report, compared to September last year, retail prices rose by 59.18% and wholesale prices rose by 47.89%.
The Turkiye Household Inflation Expectations Survey (TEBA), prepared by Koc University in collaboration with Konda Research and Consulting Company, revealed that the annual inflation rate is expected to reach 94% by the end of the year.
Meanwhile, Deutsche Bank on Tuesday released Turkiye’s forecasts for inflation, economic growth, interest rates and exchange rates.
The report, written by Yigit Onai, highlighted lower inflation and an improvement in the current account deficit as key developments for next year.
The bank expects inflation to fall further to around 42% by the end of 2024, but price rigidity in the services sector could prevent inflation from accelerating. Inflation is expected to fall to 23% in 2025.
The budget deficit is expected to narrow to 1.6% of GDP in 2024 due to lower energy prices and reduced demand for gold. Deutsche Bank predicts the budget deficit will shrink to $20 billion by the end of this year.
The fiscal deficit in 2023 was 5.2% of GDP, but it is expected to shrink to 5% next year.