Turkey: Inflation drops in December
Latest reading: Inflation dropped to 44.4% in December, below November’s 47.1%. December’s result represented the weakest inflation rate since June 2023 and came in below market expectations. The moderation was broad-based, with reduced price pressures recorded for food and non-alcoholic beverages, transport, and housing and utilities. Moreover, prices for restaurants and hotels grew at a more subdued pace.
Annual average inflation fell to 58.5% in December (November: 60.5%). Meanwhile, core inflation fell to 45.3% in December from November’s 47.1%.
Finally, consumer prices increased 1.03% from the previous month in December, coming in below November’s 2.24% increase. December’s result marked the softest rise in prices since May 2023.
Outlook: Our Consensus is for inflation to decline further in the coming quarters due to a high base effect and prior interest rate cuts.
Panelist insight: Clemens Grafe and Basak Edizgil, economists at Goldman Sachs, said:
“We expect underlying monthly inflation to remain sticky in 2025 with risks to core momentum to the upside from the recent acceleration in activity and the start of the monetary easing cycle. That said, we expect annual inflation to fall sharply in Q1 on base effects to around 36% by March given that the 30% minimum wage hike this year was significantly below the 50% last year.”