Turkish Inflation Expected to Hit 31% in April Amid Rising Energy Costs

Turkey’s inflation is projected to maintain its high trajectory in April, with economists forecasting a 31% annual increase according to a recent survey. This persistent inflationary pressure comes despite the central bank’s tight monetary policy, which has kept interest rates at 50% since March.

Energy Price Adjustments Drive Inflation

The anticipated inflation figure reflects significant adjustments in energy prices implemented during April. These price hikes, combined with the ongoing effects of currency depreciation, continue to push consumer costs higher across the Turkish economy.

A Reuters poll of 11 economists revealed median expectations for annual inflation to reach 31.0% in April, with forecasts ranging from 30.4% to 32.0%. Monthly inflation is expected to increase by 2.65%.

Recent Inflation Trends and Central Bank Response

Turkey’s annual inflation rate declined to 30.86% in March after peaking at 75.45% in May 2023. The central bank had initially predicted inflation would fall to 38% by year-end, but later revised its forecast to 42.8% in its quarterly inflation report.

Despite maintaining high interest rates, Turkey’s central bank faces ongoing challenges in curbing inflation. President Tayyip Erdogan’s administration shifted to more orthodox economic policies last year after the May elections, moving away from previous low interest rate policies that had contributed to significant lira depreciation.

Currency Pressures and Economic Impact

The Turkish lira has weakened approximately 8.5% against the dollar this year, following a 37% decline in 2023. This continued currency pressure complicates inflation management efforts and affects import costs across multiple sectors.

“The main factor that will push the April CPI higher is the simultaneous hikes in electricity, natural gas, and fuel prices,” noted Haluk Burumcekci, founder of Burumcekci Consulting.

The official inflation data is scheduled for release on May 3 at 0700 GMT, which will provide a clearer picture of the actual inflationary pressures facing the Turkish economy.