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Turkey Inflation May 2023

Turkey: Inflation moderates in May

Inflation came in at 39.6% in May, which was down from April’s 43.7%. May’s result represented the lowest inflation rate since December 2021. The moderation stemmed from a base effect and was broad-based, with reduced price pressures recorded for food and non-alcoholic beverages, transport, and housing and utilities.

Accordingly, the trend pointed down, with annual average inflation coming in at 63.7% in May (April: 67.2%). Meanwhile, core inflation rose to 46.6% in May, from the previous month’s 45.5%.

Lastly, consumer prices increased 0.04% from the previous month in May, coming in below April’s 2.39% increase. May’s result marked the weakest reading since June 2019.

Muhammet Mercan, chief economist at ING, commented on the outlook:

“Even though the elections are now behind us, at this stage, uncertainty about exchange rates and interest rates persists, as it is expected that the new economy management, led by Mehmet Simsek, will bring about significant changes in the CBT and the monetary and exchange rate policy to be implemented in the short term. Accordingly, a lira adjustment post-election and potential adjustments in wages and administered prices are likely to weigh on inflation momentum, while the new equilibrium in rates will be key to return to disinflation.”

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