Annual inflation in Türkiye showed a sharp fall in December and came in below expectations, official data showed on Tuesday, mainly due to a favorable so-called base effect and after hitting a 24-year high in October.

Consumer price inflation eased to 64.27% in December from the 84.39% reported in November, the Turkish Statistical Institute (TurkStat) said. The latest reading marks the lowest since March when prices rose 61.14%.

The coronavirus pandemic and Russia’s invasion of Ukraine have stoked inflation around the world, spearheaded by soaring food, energy and commodity prices.

December marked the second month in a row that Türkiye’s inflation has eased after hitting a 24-year high of 85.5% in October.

The decline is expected to become more pronounced in the first quarter of the year, spelling relief for this year’s annual inflation calculation.

President Recep Tayyip Erdoğan hailed the data as a sign of a "rapid recovery."

"We will see that the downward trend in inflation will continue," Erdoğan told an event in Ankara. "Our goal this year is to completely burst the bubble of inflation and remove the issue from our country’s agenda as of next year."

Treasury and Finance Minister Nureddin Nebati said Türkiye entered a significant downward trend in inflation as of November, stressing that the country ended 2022 at a level below the target set in the last year’s Medium Term Program.

Consumer prices rose 1.18% month-over-month in December, the data showed, down from 2.88% in November and below the 2.7% forecast in a Reuters poll. The estimate for annual consumer price inflation was 66.8%.

The biggest monthly consumer price increases were seen in the health sector, up 5.91%, according to the data, while key food and nonalcoholic drink prices were up 1.86%. Transport prices dropped 4.14%.

The base effect that drove the decline in annual inflation from November was a 13.6% month-over-month surge in consumer price inflation in December 2021.

The sharpest increases in annual prices were in the housing sector, at nearly 80%, followed by food and nonalcoholic drinks prices at 78% and home furniture at 73.02%.

Meanwhile, the domestic producer price index was down 0.24% month-over-month in December for an annual rise of 97.72%, the data showed.

The Turkish lira was unchanged at 18.7255 against the U.S. dollar after the data was released.

The lira depreciated some 30% against the dollar in 2022 but held mostly stable in the last quarter, which has helped temper the pace of price increases.

In its annual monetary policy report for 2023, unveiled last week, the country’s central bank pledged to use its policies "to permanently increase the weight of the Turkish lira on both the asset and liability sides of the banking system."

It said it aims to lift the share of lira deposits to 60% of all deposits in the banking system over the next six months. Lira deposits currently account for about 53% of the total. A year ago, hard currencies accounted for some 65% of all deposits in the banking system, reflecting lira depreciation and high inflation rates.

Seeking to stabilize the national currency, the monetary authority last year unveiled the "liraization" strategy, which it says is its integrated policy framework. It repeated it had no exchange rate target level and would not buy or sell hard currencies to direct the lira.

Erdoğan last month said inflation would go "upside down" in the coming months and pledged to free Türkiye from the cost-of-living "scourge" in 2023.

His government tripled the minimum wage in the past year, raised state salaries and hiked pensions for millions to ease the economic pressure on households.

The minimum wage has been increased by 55% for 2023 and Erdoğan also announced a measure that would allow more than 2 million people to retire early. He said the minimum wage may be hiked again throughout the year if necessary.

Erdoğan on Tuesday said the wages of active and retired public servants would be increased by 25% and said the government saw inflation falling further in 2023.

The government has endorsed low interest rates to boost exports, production and investment and create new jobs as part of an economic program, eventually aimed at lowering inflation by flipping the country’s chronic current account deficit to a surplus.

Last year, the country’s central bank slashed its benchmark policy rate by 5 percentage points to 9%, citing the signs of economic slowdown.

Erdoğan says high rates cause inflation and he had called for single-digit rates by end-2022. He has said the government’s new economic model is expected to yield results in the new year.

The government last year introduced several relief measures to help cushion the fallout from inflation, including a cap on rent increases, reduced taxes on utility bills and the unveiling of a major housing project for low-income families.