Türkiye’s consumer price inflation exceeds expectations in January

Türkiye’s consumer price inflation rate rose significantly in January, exceeding market expectations, under pressure mainly due to the increase in food and non-alcoholic beverage prices.

Data from the Turkish Statistical Institute showed that monthly inflation reached 4.84% in January, a higher level than previous estimates, while the annual inflation rate eased to 30.65%, driven by annual effects associated with the minimum wage hike and price adjustments that usually accompany the start of the year.

A Reuters poll had expected monthly inflation at 4.32%, while annual inflation was estimated at 30%, reflecting a gap between actual results and market expectations.

The monthly increase was driven by a 6.59% increase in the prices of food and non-alcoholic beverages, which put an additional burden on the cost of living for Turkish households.

This rise comes after a limited monthly inflation rate of 0.89% was recorded last December, at a time when the annual inflation at the time declined to 30.89%, indicating clear fluctuations in the price trajectory as the new year entered.

Average forecasts suggest that the annual inflation rate is likely to slow to around 23% by the end of this year, but it will still be well above the Central Bank of Türkiye’s 16% estimate.

In light of these developments, the Central Bank of Türkiye cut its key interest rate last January by a less-than-expected amount, to 37%, pointing to the continued risks associated with high inflation and pricing behavior, along with expectations that may hamper efforts to control price levels.