- Year-end forecast at 45%
According to Reuters article published on February 27, 2023, Türkiye's annual inflation should slow to 55.5% in February even as prices continue to rise on a monthly basis driven by higher prices of food and services, while it is expected to end the year at 45%, according to a Reuters poll on Monday.
Inflation has been stoked by a currency crisis at the end of 2021 and it touched a 24-year peak of 85.51% in October. It fell sharply in December and eased only to 57.7% in January despite a favourable base effect due to new-year price hikes on food, goods and services.
The median estimate of 14 economists in a Reuters poll for annual inflation in February stood at 55.5%. Forecasts ranged between 54% and 56.8%.
On a monthly basis the median estimate was 3.4%, in a range of 2.3% to 4.2%, mainly due to higher food prices, price hikes in education, communication and the health sector, economists said.
Türkiye's southeast region was hit by massive earthquakes earlier this month which killed more than 44,000 people and left millions homeless in cold winter weather. Business groups and economists have said the earthquake could cost Türkiye up to $100 billion and shave one to two percentage points off growth this year.
Government officials and economists have also said prices of goods and services, including food and housing, will fall in coming months by far less than previously expected due to disruptions caused by the quake.
Last week, Türkiye's central bank lowered its policy rate by 50 basis points to 8.5% to support growth in the wake of the earthquake and said the central bank will monitor its impact on the economy.
The median estimate for inflation at year-end stood at 45% in the Reuters poll, with forecasts coming in between 34% and 51.7%. The median in a poll conducted before the earthquake in January stood at 41% for end-2023.
President Tayyip Erdogan has urged monetary stimulus over the last several years, aiming to achieve price stability by slashing borrowing costs, boosting exports and flipping chronic current account deficits to surpluses.
However, resulting high inflation damaged his popularity and the quake has added to the difficulties ahead of the presidential and parliamentary elections scheduled to be held by June 18.
Before the earthquake, inflation had been expected to keep falling to around 35-40% by June. However, it is now seen to be around 44% in May, according to the median forecast of six economists who gave estimates to the Reuters poll.
The Turkish Statistical Institute will announce February inflation data at 0700 GMT on March 3.
