Announcing the bank's second quarterly inflation report this year in Ankara on Thursday, the chief banker noted that inflation in Turkey is dependent on multiple variables, but among them energy prices are game-changers these days. He said the bank expects consumer inflation to peak soon with an extra 0.5 percent upwards move due to soaring energy prices but will then start going down for the rest of the year. “We predict that inflation will gradually drop from the third quarter, and this decline will be apparent in the final quarter,” he said.
Turkey's monthly consumer prices increased in March by 0.41 percent over February, bringing the annualized consumer price index (CPI) to 10.43 percent, the Turkish Statistics Institute (TurkStat) announced April 3. Despite a slight monthly increase in consumer prices in the third month of the year, annualized inflation has slowed when compared to a three-year high of 10.61 percent in January. The country's annualized inflation in February also stood at 10.43 percent.
One major factor behind Turkey's double-digit consumer inflation is the gross domestic product's (GDP) speedy expansion for almost a decade. According to TurkStat data, the national economy expanded by 8.5 percent last year at fixed prices, on top of the 8.9 percent recorded a year earlier, becoming the fastest-growing economy in all of Europe and within the larger Organization for Economic Cooperation and Development (OECD).
On Thursday, Başçı said his bank expects consumer inflation to be between 5.3 and 7.7 percent -- with a midpoint at 6.5 percent -- by the end of this year, continuing to decrease to be recorded between 3.4 and 7 percent -- with a midpoint at 5.2 percent -- a year later. These figures are in line with the bank's previous expectations.