Disinflation

The Central Bank has kept its year-end inflation forecasts for 2024, 2025 and 2026 unchanged, vowing to maintain its cautious stance in monetary policy.

The bank projects that inflation will fall to 38 percent at the end of 2024, while its forecasts for 2025 and 2026 are 14 percent and 9 percent, respectively.

Investors and analysts will carefully listen to what the Central Bank has to say about inflation dynamics and the course of its monetary policy going forward when Governor Fatih Karahan unveils the bank's quarterly Inflation Report on Aug. 8.

The report will include the bank's inflation forecasts for this year and next.

The current course of inflation is in line with their projections, Finance Minister Mehmet Şimşek has said.

"We believe that we will close the year with an inflation rate of around 40 percent," Şimşek said in an interview on Aug. 6 with private broadcaster A Haber.

Türkiye's annual consumer inflation significantly cooled to a nine-month low of 61.78% this July, below economists' forecasts, according to official data released on Monday.

Headline inflation decreased for the second consecutive month in July from 71.60% in June, the Turkish Statistical Institute (TurkStat) data showed.

Increases in exports of goods and services contribute to reserve accumulation, financial stability and the disinflation process by reducing the current account deficit and the need for foreign currency, Vice President Cevdet Yılmaz said, welcoming the latest foreign trade data.

The main policy framework will not change, and the main objectives will be preserved when the medium-term program is updated in September, Vice President Cevdet Yılmaz has said.

The worst is over in inflation, Treasury and Finance Minister Mehmet Şimşek has said, adding that "we are the beginning of the disinflation process."

"We are implementing a very consistent disinflation program," Şimşek said in a speech he delivered at the Turkish Industry and Business Association's (TÜSİAD) high advisory council meeting in Istanbul.

Investors' interest in Türkiye continues to increase thanks to the economic program the government implements, Finance Minister Mehmet Şimşek has said.

"Our cost of borrowing is falling while [Türkiye's] CDS risk premium continues to decline," Şimşek wrote on social media platform X.

Consumer prices rose by 1.64 percent monthly in June, bringing the annual inflation rate to 71.6 percent, down from 75.45 percent in May, data from the Turkish Statistical Institute (TÜİK) have shown.

The monthly inflation was lower than the market expectation for a 2.2 percent increase in consumer prices. This was also the lowest monthly inflation recorded in 2024.

Retail prices in Istanbul increased by 3.42 percent in June after rising 3.6 percent in the previous month, data from the Istanbul Chamber of Commerce (İTO) has shown.

The annual increase in retail prices also slowed from 82.2 percent in May to 82.1 percent last month.