Turkey’s annual inflation rate rose at a lower-than-expected pace in May but still jumped to a 24-year high, official data showed Friday, fueled by soaring food and energy prices.
The consumer price index (CPI) rose 73.5% in the 12 months through May, up from nearly 70% in April, the Turkish Statistical Institute (TurkStat) said.
The increase, however, was smaller than in previous months, signaling that price pressure might be slowing. Russia’s invasion of Ukraine, which led to a surge in gas, oil and grain prices, has compounded the situation in import-reliant Turkey.
Treasury and Finance Minister Nureddin Nebati said monthly inflation readings are trending lower in a positive sign.
"Fight against inflation will continue to be our top priority in the coming period," Nebati wrote on Twitter. "We will never allow our citizens to be crushed under the pressure of inflation."
The sharpest increases in annual prices were in the transportation sector, at 107.6%, followed by food and nonalcoholic drinks prices at 91.6%, according to the statistical institute’s data.
Month-over-month, consumer prices rose nearly 3%, TurkStat said, compared to a market forecast of 4.8%. The consensus forecast was for annual inflation to rise to 76.55%.
A core index that strips out the impact of volatile items such as food and energy reached 56%, the data showed.
The domestic producer price index climbed 8.76% month-over-month in May for an annual rise of 132.16%.
The latest figure surpassed the 73.2% touched in 2002 and is the highest since October 1998 when annual inflation was 76.6%.
Turkey’s consumer price index has surged since last autumn as the Turkish lira weakened after the central bank in September embarked on a 500 basis-point easing cycle.
Consumer prices have been increasing despite tax cuts on basic goods and government subsidies for utility bills to ease the burden on household budgets.
The government says inflation will fall under its new economic program, which prioritizes low-interest rates to boost production and exports to achieve a current account surplus.
The lira weakened 0.25% to 16.5050 against the dollar touching its weakest since December. The currency declined 44% in 2021 and another 20% this year.
The Central Bank of the Republic of Turkey (CBRT) revised its inflation forecasts for this year and next mainly because of the rise in commodity prices and supply issues.
A presentation by Governor Şahap Kavcıoğlu in April suggested inflation would peak around 70% before June before sliding to 42.8% by the end of the year.
The central bank has held its benchmark interest rate steady at 14% in five meetings this year and said disinflation will start due to other measures, the so-called base effect and an expected end to the Ukraine conflict.