Turkish inflation seen nearing 81 per cent in July, falling to 70 per cent by end-2022

Turkey’s inflation is expected to near 81 per cent in July and was seen declining to just 70 per cent by end-2022, a Reuters poll showed on Friday, as global energy and commodity costs and the lira’s steady decline continue to push prices higher.

Inflation has surged since last autumn, when the lira slumped after the central bank gradually cut its policy rate by 500 basis-points to 14 per cent in an easing cycle sought by President Tayyip Erdogan.

It has been further stoked this year by the economic fallout from Russia’s invasion of Ukraine, as well as the lira’s continued decline. The currency shed 44 per cent against the dollar last year, and is down 27 per cent this year.

The median estimate 10 institutions who participated in the Reuters poll for annual inflation in July was 80.50 per cent, with forecasts ranging between 79.45 per cent and 82.50 per cent.

That would make it the highest reading since August 1998, when annual inflation was 81.4 per cent and Turkey was battling to end a decade of chronically high inflation.

The median forecast for the monthly figure was 2.90 per cent, in a range of 2.28 per cent and 4 per cent.

Inflation was seen falling only to 70 per cent by the end of the year, according to the median estimate of 11 economists, with forecasts between 60.75 per cent and 77 per cent.

The median for the year-end was 69.5 per cent in the previous Reuters poll conducted in June.

The government has said inflation will fall with the new economic programme, which prioritises low rates to boost production and exports and aims to achieve a current account surplus.

Erdogan has said that he expects inflation to come down to “appropriate” levels by February-March next year, while the central bank raised its end-2022 forecast to 60.4 per cent on Thursday from 42.8 per cent previously.

The bank’s quarterly presentation showed the estimated range of annual inflation reaching nearly 90 per cent this autumn before easing.

Opposition lawmakers and economists have questioned the reliability of the Turkish Statistical Institute’s (TUIK) figures, claims TUIK has dismissed. Polls show Turks believe inflation is far higher than official data.

TUIK is scheduled to announce July inflation data at 0700 GMT on Aug. 3.