Türkiye’s monthly inflation falls below 1% for first time in 30 months

ISTANBUL

Türkiye’s monthly Consumer Price Index (CPI) in November fell to its 30-month lowest at 0.87%, while declining to its four-year low at 31.07% on an annual basis, according to the country’s statistical bureau TurkStat.

The Turkish economy continued to grow for the last 21 quarters, while its economic program supported the disinflation efforts.

Türkiye’s CPI rose 0.87% on a monthly basis in November and its Domestic Price Producer Index (D-PPI) increased 0.84%, while annual inflation was at 31.07% for consumer prices and 27.23% for domestic producer prices, data showed.

The Turkish Central Bank (TCMB) gradually continued its easing cycle, while boosting its total reserves, hence reducing the potential currency risks — the bank’s total reserves hit a record of $198.4 billion in October.

The balance of Currency-Protected Turkish Lira Deposits and Participation Accounts continued, falling by 30.3 billion Turkish lira ($713.8 million) in the week of Nov. 21 to 22.4 billion Turkish lira ($527.7 million).

These developments fuel foreign demand for Turkish lira assets, while the country’s borrowing costs are on decline.

Türkiye’s five-year credit default swap (CDS) fell to 233 basis points on Monday, reaching its lowest since May 2018. The CDS currently stands at 231 points.

At the same time, Türkiye’s current account balance posted a surplus of $1.1 billion in September, extending its positive trend to the third consecutive month — the balance saw a surplus of $1.7 billion in July and $5.4 billion in August.

Haluk Burumcekci, a finance analyst and economist, told Anadolu that inflation is expected to close the year at around 31%, so long as no shocks over exchange rates, wages, administered prices, and commodities come to the fore in December.

“The unprocessed food group dragged down food inflation, as the annual rise in food prices slowed to 27.4%, below the Inflation Report’s estimate,” he said, noting that the price hikes in non-food subgroups of housing, household goods, health, communications, education, restaurants-hotels, and various goods and services were below last year’s level.

He added that the central bank is expected to cut rates by 100 basis points this month.

Filiz Eryilmaz, an associate professor of economics at Bursa Uludag University, told Anadolu that inflation came below estimates, even lower than the lowest inflation estimates in surveys.

Eryilmaz said a negative trend in food prices was seen, while the relative level in other services was also lower, especially versus the inflation in Istanbul.

She said the central bank is expected to cut rates by 150 basis points at its December meeting, but a 200-basis-point is also on the table.