Turkey’s inflation falls to lowest in 18 months

Inflation in Turkey eased more than anticipated in December 2024, reaching 44.4 percent, the lowest level in 18 months, according to the Turkish Statistical Institute (TurkStat).

This marks the seventh consecutive monthly decline following the monetary easing from the central bank.

On a monthly basis, consumer prices rose by 1.03 percent in December.

Education, housing and restaurant prices were the main factors behind the rise. Price growth in food and non-alcoholic beverages eased to 43.58 percent from 48.57 percent.  

In December, Turkey’s central bank cut its key lending rate by a higher-than-expected 250 basis points to 47.5 percent on December 26, down from the 50 percent it has stood at since March.

Mustafa Sönmez, an economist, told AGBI that the decision to cut rates was no surprise, as there had been pressure from the business community to ease borrowing costs. However, he did not believe commercial banks would move quickly to reduce their own rates on loans.

Turkey is planning additional interest rate cuts in 2025 after the central bank cut its key rate to 47.5 percent to tame inflation, president Tayyip Erdoğan said last month.

In a post on social messaging platform X, finance minister Mehmet Şimşek said that the decline in inflation will continue with the lagged effect of monetary policy, stronger support from public finances and reforms that will increase supply.