End-year inflation expectations deteriorate
ANKARA
Inflation expectations for the end of 2023 increased from 37.12 percent in May to 38.55 percent in June, the Central Bank’s Survey of Market Participants showed on June 16.
The 12-month ahead expectations also rose from 29.8 percent to 30.65 percent.
Consumer prices are expected to increase by 2.8 percent in June from May, while the expectations for July inflation stand at 2.5 percent, according to the bank’s survey.
The monthly inflation rate was only 0.04 percent in May, as the Turkish Statistical Institute (TÜİK) applied a “zero price” method for natural gas in the consumer price index (CPI) calculations for that month.
The government had pledged ahead of the May elections that it would provide free gas in May, and a monthly 25 cubic meters of gas for free until May 2024.
Participants of the survey said they expect the Central Bank’s one-week repo auction rate to be hiked to 17.56 percent. The Central Bank’s Monetary Policy Committee will meet on June 22 to decide on the key policy rate. Analysts widely expect the bank to opt for a rake hike at next week’s meeting.
Participants also revised their end-year U.S dollar/Turkish Lira rate forecast upward, from the previous survey’s 23.09 to 26.18 and the 12-month ahead rate from 24.6 to 28.99.
The Turkish economy is expected to grow by 3.8 percent this year, an upward revision from the May survey’s 3.7 percent. However, the GDP growth expectations for 2024 were revised downward from 4.6 percent to 4.5 percent.
