Significant progress made in against inflation: Şimşek

ANKARA

Türkiye has entered a new phase in its fight against inflation, Treasury and Finance Minister Mehmet Şimşek has said, stressing that the economic program is on track.

Speaking at the Ziraat Bank Agricultural Ecosystem Meeting in Istanbul, Şimşek recalled that annual inflation had fallen to its lowest level in three and a half years as of May.

“There has been an uninterrupted disinflation process over the past year,” he stressed.

Şimşek reiterated that the government's top priority remains tackling the cost of living, emphasizing that significant progress has been made in the economic program aimed at bringing inflation down to permanently low single-digit levels.

He noted that the current trajectory reflects the effectiveness of ongoing fiscal and monetary policies.

“Türkiye is managing this process successfully,” he added.

Inflation in core goods declined to around 20 percent and headline inflation currently stands at approximately 35 percent, Şimşek said, but expressed confidence that it would fall into the 20s by year-end.

“We believe we will close the year with inflation in the 20 percent range,” he said, adding that annual inflation in many essential goods is already rising at single-digit levels.

He also highlighted improving inflation expectations, with recent data showing a marked acceleration in household confidence.

“Our citizens are beginning to believe in the disinflation process,” he said.

Şimşek also emphasized that the government’s fight against inflation extends beyond monetary and fiscal measures.

“Increasing housing supply in earthquake-affected regions and closing the housing gap remain other top priorities,” the minister stated.

He underscored the launch of social housing initiatives.

“We know that rent is one of the biggest drivers of the cost of living. That’s why this social housing initiative is so critical,” Şimşek said.

The economic program has led to a significant improvement in the country’s external balance, he also noted.

“Our gross external financing needs are declining, and our resilience to shocks is increasing,” Şimşek said.

Over the past two years, Türkiye has significantly reduced its current account deficit to between 1 and 1.5 percent of GDP, bolstering the economy’s resilience against external shocks, according to Şimşek.

Türkiye has faced multiple external shocks over the past three months, including regional conflicts, trade tensions, and other global developments, he said, but emphasized that the country has managed the process effectively.

“As of May, we are seeing a renewed increase in reserves and a decline in Türkiye’s risk premium,” he said, adding that improvements in financial conditions are expected to resume in the coming period.