Turkey’s inflation rate is expected to have risen to a near 24-year high of 76.55% in May due to high food and energy prices and a weakening pound, according to a Reuters poll published on Monday, while the median estimate for the end of the year amounted to 63.5%.
Turkey’s consumer price index has risen since last autumn as the pound weakened after the start of the central bank’s 500-base easing cycle in September long sought by President Tayyip Erdogan.
The pound slide and rising food and energy prices pushed inflation to 69.97% in April, the highest in 20 years, despite tax cuts on basic goods and government subsidies for some electricity bills to reduce the burden on household budgets.
The average rating of 14 institutions in the Reuters poll for the annual consumer price inflation in April was 76.55%, with forecasts ranging between 72.50% and 80.40%.
This would make it the highest annual inflation since October 1998, when it reached 76.6%.
The median monthly estimate was 4.80%, in the range of 2.40% and 7.10%.
Economists are steadily revising their year-end estimates, with an average of 15 economists’ year-end inflation estimates now at 63.50% – about 11.5 percentage points higher than the median in the April poll. .
The forecasts for the end of the year ranged from 43.7% to 120%.
Credit Suisse said there were significant risks to its year-end inflation forecast as the central bank is likely to keep interest rates unchanged for the foreseeable future. “In the next period, leaving the pound vulnerable to further devaluation and keeping the risks to our inflation forecasts steadily rising,” it said in a note.
The pound has been under pressure again recently, falling more than 9% this month and raising its losses so far this year to almost 20%.
The government said inflation would be reduced with the new economic program, which prioritizes low interest rates to boost output and exports and aims to achieve a current account surplus.
The Turkish central bank has revised its inflation forecasts for this year and next, mainly due to rising commodity prices and supply issues.
A presentation by Governor Sahap Kavtzioglu last month showed that inflation would peak at around 70% before June before falling to 42.8% by the end of the year.
The central bank kept its key interest rate stable at 14% in five sessions this year and said deflation would be triggered by other measures it has taken, the so-called base effect and the expected end to the conflict in Ukraine.
The Turkish Statistical Service is scheduled to publish inflation data for May on June 3rd.
Source: Capital
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