Turkey’s inflation seen falling to 51.3 percent in March: Poll

Turkey’s annual inflation should slow to 51.3 percent in March even as prices continue to rise on a monthly basis, and it is expected to end the year at 46.5 percent, according to a Reuters poll on Wednesday.

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Inflation has been stoked by a currency crisis at the end of 2021 and it touched a 24-year peak of 85.51 percent in October. It fell sharply in December and eased only to 55.2 percent in February despite a favorable base effect.

The median estimate of 14 economists in a Reuters poll for annual inflation in March stood at 51.3 percent. Forecasts ranged between 50.1 percent and 52.8 percent.

On a monthly basis the median estimate was 2.85 percent, in a range of 2 percent to 3.85 percent, mainly due to higher food prices, price hikes in education, restaurants and hotels, economists said.

Turkey’s southeast region was hit by massive earthquakes last month which killed more than 50,000 people and left millions homeless. The earthquake is expected to cost Turkey more than $100 billion and shave one to two percentage points off growth this year.

Last week, Turkey’s central bank kept its policy rate steady after easing to 8.5 percent to support growth and employment in the wake of the disaster. It said the current level of interest rates were adequate to support earthquake recovery.

The median estimate for inflation at year-end stood at 46.5 percent in the Reuters poll, with forecasts coming in between 35 percent and 55 percent. The median in a poll in February stood at 45 percent for end-2023.

President Tayyip Erdogan has urged monetary stimulus over the last several years, aiming to achieve price stability by slashing borrowing costs, boosting exports and flipping chronic current account deficits to surpluses.

However, resulting high inflation damaged his popularity and the quake has added to the difficulties ahead of the presidential and parliamentary elections scheduled to be held on May 14.

Before the earthquake, inflation had been expected to keep falling to around 35-40 percent by June. However, it is now seen to be around 45 percent, according to the median forecast of six economists who gave estimates to the Reuters poll.

The Turkish Statistical Institute will announce February inflation data at 0700 GMT on April 3.

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