eagerly awaited inflation rate

When will the inflation rate be announced? What is the inflation expectation in January?

The general expectation of economists and economic management is that the drop in annual inflation will continue in the first quarter of the year due to the flat course in TL, the slowdown in global energy prices, and the contribution of the base effect. Reductions in domestic energy prices are expected to directly and indirectly support this decline.

WHEN WILL THE INFLATION RATE BE ANNOUNCED?

TURKSTAT will announce the inflation data for December on February 3 at 10:00.

HOW MUCH IS THE INFLATION RATE EXPECTED?

Monthly inflation is expected to remain high at 3.8% in January due to increases in public transport, bread and many products earlier in the year, while the annual CPI is expected to fall sharply to 53.50% due to to the effect basis.

According to the survey carried out by Reuters with the participation of 13 economists, annual inflation is expected to decrease to 41% by the end of 2023, almost double the forecasts of the Central Bank (CBRT). In the Reuters survey, annual inflation forecasts are between 51.2% and 56.65% in January, while monthly forecasts are between 2.30% and 5.95%. Year-end forecasts range from 30% to 48%.

Economists believe that the reason for the strong increase in monthly inflation is the rise in many products and services such as transportation, cigarettes, automobiles, medicines, and bread at the beginning of the year. The year-end forecasts are well above the levels forecast by economic management at this time.

The governor of the Central Bank, Şahap Kavcıoğlu, stated at the press conference last week that there is no room for high price increases and maintained his forecast that inflation would reach 22.3% by the end of the year. After hitting a 24-year high of 85.51% in October following the late-2021 currency crisis, the CPI fell month-on-month for the first time since May 2021 in November. Annual inflation, which fell sharply to 64.27% in December due to the base effect, is expected to continue this decline in January as well.

In the current Reuters analysis of inflation, it was noted that the direction of the economy predicted inflation to be around 40% during the election period. In the same news, the four economists whose calculations they were referring to had forecast May annual inflation in the 35-43% range if there were no further depreciation in TL.

There is a significant base effect on inflation as the strong dollar/TL gains in November and December 2021 did not occur last year. The base effect will also be evident in January, when double-digit inflation is observed compared to the previous month. Therefore, even if price increases continue, annual inflation will decrease. Confederation of Turkish Trade Unions (Türk-İş), food inflation calculated in Ankara increased by 9.02% in January compared to the previous month; announced that the hunger limit was 8,864 TL, above the current minimum wage.

Furthermore, economists say they have difficulty giving forecasts for the end of 2023, since it is an electoral period and the government and the opposition are pursuing very different economic policies. The government aims to combat inflation by turning the chronic current account deficit into a surplus by implementing an economic program that supports production and exports at low interest rates. The opposition, for its part, promises to return to conventional politics if it wins the elections scheduled for May 14. President Tayyip ErdoÄŸan stated that inflation will start to decline in the next period and will drop to 30% by mid-year and 20% by the end of the year.

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Source: Sozcu

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