ISTANBUL (Reuters) – Turkish annual inflation slid to 64.27% in December, official data showed on Tuesday, below forecast, dropping because of a favourable base effect after hitting a 24-year high in October.
President Tayyip Erdogan’s unorthodox low interest-rate monetary policy and a resulting currency crisis pushed inflation to a peak of 85.5% in October before dipping slightly in November.
Consumer prices rose 1.18% month-on-month in December, the Turkish Statistical Institute said, below a Reuters poll forecast of 2.7%. The forecast for annual consumer price inflation was 66.8%.
The biggest monthly consumer price increases were seen in the health sector, up 5.91%, while key food and non-alcoholic 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-on-month surge in consumer price inflation in December 2021.
Despite soaring prices, the central bank has slashed its policy rate by 500 basis points since August to 9%, citing an economic slowdown. The easing was part of Erdogan’s economic programme prioritising exports, production, investment and employment.
Ad: Save every day with Amazon Deals: Check out today's daily deals on Amazon.
The lira was unchanged at 18.7255 against the dollar after the data was released.
The lira shed 44% of its value against the dollar in 2021, most of it during a December currency crisis sparked by rate cuts. It shed another 30% in 2022 to historic lows but held mostly stable in the last quarter.
The Reuters poll showed inflation was expected to remain elevated this year, ending 2023 at 43.2%, nearly twice the level forecast by the government and raising the prospect of continued cost-of-living strains as Turks vote in presidential and parliamentary elections by June that are expected to be tight.
The domestic producer price index was down 0.24% month-on-month in December for an annual rise of 97.72%.
(Reporting by Berna Suleymanoglu and Canan Sevgili; Writing by Daren Butler; Editing by Ece Toksabay, Robert Birsel)