Turkish inflation rate falls again for the first time in months
In Turkey, the inflation rate decreased for the first time in months in June, according to official figures. The increase in consumer prices amounted to 71.6 percent in the annual comparison in the previous month. "The process of disinflation has begun," wrote Finance Minister Mehmet Simsek on X's online platform on a Wednesday. Disinflation means a noticeable reduction in the inflation rate.
In May, the inflation rate had reached a value of over 75 percent. However, the Turkish Central Bank had already expressed optimism at the beginning of May: From June onwards, the inflation rate would ease and be at 38 percent by the end of the year. Also, President Recep Tayyip Erdogan had recently stated that "inflation fever" would decrease in the coming months.
Analyst William Jackson of Capital Economics stated that the decline in June was greater than expected. He predicted that the inflation rate would even fall more significantly in July and August. However, he considers it unlikely that inflation will be below the 40-percent mark by the end of the year.
Erdogan had long resisted higher interest rates from the Central Bank despite rampant inflation. After his re-election as President last year, he then changed the economic leadership and initiated a rate hike. The Central Bank raised interest rates from 8.5 percent at the time to the current 50 percent.
The decrease in Turkey's inflation rate, which started in June, was significantly more than what analyst William Jackson had anticipated for July and August. Despite this, he believes that the inflation rate might not fall below the 40-percent mark by the end of the year, as it was a 'Turkish' phenomenon that had been affecting the economy for several months.
