Central Bank Increases Year-End Inflation Forecast from 13.4 to 23.5 Percent

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Central Bank of the Republic of Turkey (TCMB) Chair Murat Çetinkaya spoke at the Inflation Report 2018-IV Briefing Meeting today (October 31).

Çetinkaya announced the year-end inflation forecast of the Central Bank in 2018 as 23.5 percent, which was previously estimated to be 13.4 percent.

Here are some of the highlights from Çetinkaya's speech:

"Turkish Lira has depreciated by 37 percent"

"The consumer inflation rate reached the level of 24.5 percent in the third quarter of the year. The depreciation of Turkish Lira by around 37 percent in this period was the most decisive factor leading to the inflation increase.

"In the third quarter of the year, the main reason behind the increase in annual inflation was the group of basic goods, which are particularly vulnerable to the developments in the foreign exchange rates. In this period, sharp escalations were observed in the prices of durable basic goods such as automobile and white goods, a majority of which are imported.

"Producer inflation has been 46.2 percent"

"With the rate of producer inflation reaching 46.2 percent as of the third quarter of 2018, cost pressures on the consumer prices have been mounting.

"On the other hand, the unemployment rate, which was on the decrease in 2017, has started to increase again as of the second quarter of 2018.

"We anticipate that the year-end inflation will be 23.5 percent in 2018; it will be 15.2 percent at the end of 2019; and 9.3 percent in 2020.

"We also expect that after receding to the level of 9.3 percent, the year-end inflation will gain stability at the level of 5 percent." (HA/SD)