Turkey: For now, inflation could be said to have dropped because of the high base in 2022
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We got really shocked by the Turkey inflation print released last week. It's to less to say it's surprising. That's why we reached out to expert, Andrey Goilov (RoboForex) to ask what does he adress this unexpected decline to.
Andrey Goilov (RoboForex): The CPI in Turkey should be treated cautiously. The official statistics for January did demonstrate a decline in inflation to 57.6% y/y from 62.4% previously. Monthly inflation was estimated at 6.65%. Considering the extremely high rate of price increases in Turkey, such data is good news.
However, according to independent ENAG research, January inflation in Turkey was at least 121%.
In February 2023, the Turkish CB decreased the interest rate to 8.5% to create favourable conditions for the economy. This factor can support inflation by stimulating consumer demand. President Erdogan is confident that lowering the interest rate slows inflation, although the developed world believes otherwise.
For now, inflation could be said to have dropped because of the high base in 2022.
For the time being, signals about a decrease in the Turkish inflation rate should be treated with caution. The trend will become stable as soon as inflation starts to fall by 5% per month on a more permanent basis. So far, we have only two months of mixed observations.
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