Annual inflation in Türkiye is expected to fall, forecasts showed, shortly before the Turkish Statistical Institute (TurkStat) will reveal inflation figures on Thursday.
Inflation in Istanbul, one of the country’s largest cities and vital economic centers, showed a year-on-year decline while continuing to rise on a monthly basis.
A Reuters poll showed on Monday that Türkiye’s annual inflation is expected to continue its decline in September and fall below the central bank’s policy rate (50%) for the first time since 2021.
The median estimate of 19 economists showed annual inflation of 48.3% in September, down from 51.97% in August.
Forecasts ranged from 47.8% to 49.1%. Month-on-month, inflation is seen rising to 2.2%, with forecasts ranging between 2% and 2.8%.
Monthly inflation was high in January and February, largely due to a big minimum wage hike and new-year price updates, before slowing to some 3.2% in March and April. After dipping in June, inflation rose to 3.23% in July on the back of mid-year price adjustments.
Monthly inflation was 2.47% in August on the back of a natural gas price hike for residential users, the first such price adjustment in almost two years.
Türkiye’s annual consumer inflation rate slowed to 71.60% in June. It fell to 51.97% in August, decelerating from 61.78% in July.
At the same time, inflation in Istanbul rose by 3.9% on a monthly basis last September, while annual inflation fell to 59.18%.
The Istanbul Chamber of Commerce (ITO) said on Tuesday that the Cost of Living Index for wage earners in Istanbul, which reflects retail price movements, increased by 3.90% compared to the previous month, while the Wholesale Price Index, which tracks wholesale price movements, rose by 4.67%.
It said that compared to September of the previous year, retail prices increased by 59.18%, while wholesale prices rose by 47.89%.
A Türkiye Household Inflation Expectations Survey (TEBA), prepared by the Koç University in collaboration with the Konda Research and Consulting Company, revealed that annual inflation is expected to reach 94% by the end of the year.
Meanwhile, Deutsche Bank published on Tuesday its forecasts for Türkiye’s inflation, economic growth, interests rates and exchange rate.
The report, authored by Yigit Onay, highlighted declining inflation and improvements in the current account deficit as key developments for the upcoming year.
The bank expects inflation to drop further to around 42% by the end of 2024, although rigid prices in the services sector could hinder a faster decline. Inflation is projected to fall to 23% in 2025.
A combination of lower energy bills and reduced gold demand is expected to shrink the deficit to 1.6% of GDP in 2024. By the end of this year, Deutsche Bank estimates the deficit will narrow to $20 billion.
The budget deficit, which stood at 5.2% of GDP in 2023, is expected to shrink to 5% next year, it says.
