We are far from 85% in 2022 but it remains galloping: Turkey raises its inflation forecast to 29.5% for the end of the year
The central bank forecasts that inflation will decline "to reach (its) intermediate targets of 21% by the end of 2027, 13.5% by the end of 2028 and 9% by the end of 2029,
Turkey's central bank on Thursday raised its inflation forecast for the end of the year to 29.5% from 28%, citing supply pressures linked to the war in Iran, among other geopolitical tensions. “Supply shocks caused by geopolitical developments are hampering the decline in headline inflation. The persistence of this situation maintains upside risks to the inflation outlook and calls for a prudent monetary policy stance,” Governor Fatih Karahan said at a press conference to present the last inflation report of the year.
“We have raised our inflation forecast for the end of 2026 to 29.5%,” said Fatih Karahan. Turkey has had double-digit inflation since 2019, which soared to 85% by the end of 2022 after President Recep Tayyip Erdogan launched an unconventional plan to sharply cut interest rates to boost growth. For comparison, inflation remains much more contained in the euro zone, even if energy prices have also been pushed up by the war in Iran.
According to Eurostat, consumer prices increased by 3.8% year-on-year in September 2026, a rate almost eight times lower than that observed in Türkiye. +29.7% in October This caused a sharp fall in the lira against the dollar and triggered a cost of living crisis for millions of Turks, prompting Recep Tayyip Erdogan to reverse his policies and let the central bank raise rates in order to control inflation. The central bank forecasts that inflation will decline "to reach (its) intermediate targets of 21% by the end of 2027, 13.5% by the end of 2028 and 9% by the end of 2029, before stabilizing at the level of the medium-term inflation target of 5%".
Fatih Karahan said rising oil prices, fueled by intensifying regional tensions and dampened expectations for normalization of energy flows in the Strait of Hormuz, contributed to the upward revision. “Geopolitical developments remain the main risk factor for further increases in oil prices and the continuation of high price levels,” he added. Turkey's inflation rate remained stable in October at 29.77% year-on-year, according to official data.
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- BFM Business12 Nov, 10:57
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