Turkey’s annual inflation rate declined for the seventh consecutive month in December, reaching 44.38%, down from 47.09% in November, according to the Turkish Statistical Institute (TurkStat).
This figure is slightly below market expectations of 45.21%.
The transportation sector experienced the lowest annual inflation at 25.88%, while education saw the highest at 91.64%.
On a monthly basis, consumer prices rose by 1.03% in December, marking the slowest increase since May 2023 and a decrease from the 2.24% rise observed in November.
Treasury and Finance Minister Mehmet Şimşek commented on the data via social media, stating: “In December, inflation was 1%, the lowest level in the last 19 months. Annual inflation fell to 44.4%, 2.4 percentage points above the Central Bank’s forecast range.”
The Central Bank of Turkey had previously projected year-end inflation to be around 44% for 2024 and 21% for 2025.
In response to the declining inflation trend, the Central Bank reduced its key interest rate by 250 basis points to 47.5% in December, marking the first rate cut in nearly two years.
This move indicates a shift towards a more accommodative monetary policy stance, aiming to support economic growth while continuing efforts to control inflation.
Analysts anticipate that the Central Bank will proceed cautiously with further rate adjustments, closely monitoring inflation dynamics and other economic indicators.
Looking ahead, the government has implemented tax adjustments, including a 6% hike in the special consumption tax on fuel, effective January 1, 2025, as part of its strategy to curb inflation.
Despite these measures, the Central Bank aims to reduce inflation to 21% by the end of 2025 and further to 12% by 2026.
The Turkish lira remained relatively stable following the release of the inflation data, trading at approximately 35.3850 to the US dollar.