Turkey‘s inflation is expected to rise above 78% in June and it was seen declining to just below 70% by end-2022, a Reuters poll showed on Tuesday, as pricing behaviour deteriorates across the board due to a weak currency and a loose monetary policy.
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%, 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% against the dollar last year, and was down 24% this year before recovering some losses in recent days.
The median estimate of 12 economists who participated in the Reuters poll for annual inflation in June was 78.35%, with forecasts ranging between 72.30% and 81.80%.
That would make it the highest reading since September 1998, when annual inflation was 80.4% and Turkey was battling to end a decade of chronically high inflation.
The median of nine economists for the monthly figure stood at 5.38%, in a range of 3.50% and 6.80%.
Inflation was seen falling only to 69.50% by the end of the year, according to the median estimate of 18 economists, with forecasts between 60.33% and 120%.
The median for the year-end stood at 63.5% in the previous Reuters poll conducted in May.
Citi said it continues to see a broad-based deterioration in price dynamics, while soaring producer prices continue to exert pressure on consumer prices, further clouding the outlook.
“We expect annual inflation to remain elevated until November (averaging over 80% y-o-y) before moving towards 65% y-o-y in December on the back of strong base effects,” it said.
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 said on Monday that he expects inflation to come down to “appropriate” levels by February-March next year, while the central bank said it would drop to 42.8% by end-2022.
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 June inflation data at 0700 GMT on July 4.