Turkey: Inflation falls to over one-year low in January
Latest reading: Inflation eased to 42.1% in January, following December’s 44.4% print. January’s figure marked the lowest inflation rate since June 2023. Looking at the details of the release, prices for food and non-alcoholic beverages and prices for transportation grew at slower rates in January.
In addition, the trend pointed down, with annual average inflation coming in at 56.4% in January (December: 58.5%). Meanwhile, core inflation fell to 42.6% in January from the previous month’s 45.3%.
Lastly, consumer prices increased 5.03% in January over the previous month, accelerating from the 1.03% increase recorded in December. January’s jump exceeded market expectations and was driven by a minimum wage hike and several new-year prices adjustments.
Outlook: Our panel expects inflation to soften further in the coming months due to past monetary policy tightening and a high base of comparison.
Panelist insight: Clemens Grafe and Basak Edizgil, economists at Goldman Sachs, commented:
“While our base case remains that sequential inflation will trail close to its current level through 2025, we continue to see the risks to core momentum to the upside if activity continues to accelerate. That said, we expect annual inflation to fall on base effects to 25.5%yoy (revised upwards from 23.7%yoy after today’s print). We expect the TCMB to continue its cutting cycle but today’s print also makes it less likely that they will step up the pace of rate cuts in March.”