Agencies
President Recep Tayyip Erdoğan on Friday expressed optimism about the future trajectory after inflation slowed down in July for the first time in eight months after a series of aggressive rate hikes, saying policies under the government’s economic program are "working.” "We need a bit more patience. The decline in inflation has just begun and will continue to accelerate,” Erdoğan told reporters aboard a presidential plane on his return from a meeting of the Shanghai Cooperation Organization (SCO) in Astana.
Official data on Wendesday showed Türkiye’s annual inflation rate began what is expected to be a sustained fall in June, dipping more than expected to 71.6%. Monthly inflation also cooled markedly.
Erdoğan said the downward trend will continue with inflation expected to be in the low 60s in July and in the low 50s in August.
He reaffirmed that the government would not resort to populism and that the best thing to do for low-income earners, minimum wage workers, and retirees is to reduce inflation permanently to single digits.
The country’s central bank has held its benchmark policy rate steady over the last three months, vowing to act if the inflation outlook worsens, since raising rates by 500 basis points, or 5 percentage points, to 50% in March.
It has tightened by 4,150 basis points since June 2023, as authorities reversed yearslong loose policy after last year’s presidential and parliamentary elections.
Erdoğan said the government last year set a timeline for the transition to disinflation, also stressing "extraordinary conditions” after devastating earthquakes struck the country’s southeastern region and weighed heavily on the nation’s budget.
"Effective monetary policy takes time to show results, and additional fiscal efforts were necessary. Therefore, we projected that disinflation would begin after May 2024,” Erdoğan stated. "Indeed, we observed a drop in annual inflation in June, and we anticipate that July will likely be in the low 60s. By August, we expect it to be in the low 50s. When the September inflation figures are announced, it will probably be just below 50,” said the president.
The Central Bank of the Republic of Türkiye (CBRT) expects disinflation to take hold in the second half of the year and forecasts an end-year rate of 38%, due to its tight policy stance.