Official data showed today, Wednesday, that inflation in Turkey rose by 64.77% on an annual basis in December, continuing the upward trend that is expected to continue in the coming months after the large increase in the minimum wage.
Inflation in November reached 61.98% on an annual basis.
On a monthly basis, inflation reached 2.93%, according to the Turkish Statistical Institute, compared to 3.28% in November.
Inflation began to decline on a monthly basis in recent months in conjunction with the monetary tightening policy.
A Reuters poll expected annual inflation in Turkey to rise to 65.1% last December, and monthly inflation to record 3.1%.
The increase was led by the hotel and restaurant sector prices during the past year, which recorded 93.2%, followed by the education sector at 82.1%.
The prices of food and non-alcoholic beverages also increased by 72% during the year.
After years of monetary easing, the Turkish Central Bank reversed course last June and raised interest rates by 3,400 basis points to 42.5% with the aim of controlling inflation.
But by the end of last year, the government raised the minimum wage for the new year by 49%, an increase that was larger than expected.
About 7 million people benefit from the increase in the minimum wage, and the increase is likely to contribute to raising inflation rates in the coming months, according to economic experts.
Inflation increased after the currency crisis at the end of 2021, reaching its highest level in 24 years at 85.51% in October 2022. The value of the lira declined against the dollar by about 37% over the past year.
The data also showed that the country’s producer price index rose by 1.14% on a monthly basis in December, and 44.22% on an annual basis.
High volume of exports
Turkish President Recep Tayyip Erdogan said on Tuesday that his country’s exports hit a record high in 2023, rising by 0.6% compared to the previous year, reaching $255 billion and 809 million.
He added in a press conference that he believes that the improvement in the current account balance will continue with the decline in the trade deficit during the past months of November and December.
Ministry of Commerce data showed a decline in Turkey’s imports during the past year by 0.51% to $361.85 billion..
Turkey’s trade deficit decreased by 3.2% on an annual basis to $106.04 billion during 2023, while the deficit in December alone decreased by 37% to $6.1 billion compared to the same month of the previous year.
For his part, Turkish Trade Minister Omar Polat said that his country aims to increase its exports in 2024 to $267 billion and to $302 billion in 2026.
He explained that the strong performance of exports contributed to recording an increase in the economic growth rate in the third quarter of last year by 5.9%, thus maintaining its continuous growth for the 13th consecutive quarter.
