Turkey Expected to Record 30% Inflation in December Amid Plummeting Lira

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According to a Reuters poll, economists expect the annual inflation of Turkey to hit 30.6% in December. If this occurs, it would be the first time the country’s inflation would breach 30% since 2003, as the prices of goods skyrocketed due to intense volatility in the Lira.

The 30.6% median forecast came from a panel of 13 economists with forecasts ranging between 26.4% to 37.3%.

Already, Turkey suffered from high inflation rates of around 20% in the past months due to the fall of the Lira to record lows, following a 500 basis point slash by the central bank in September.

Meanwhile, the month-on-month inflation forecast came in at 9%, with forecasts ranging between 5.5% to 14.6%.

Turkey Authorities Claim that Inflation Triggers are Short Term

The Central Bank of the Republic of Turkey (CBRT) recently asserted that temporary factors were behind the surge in inflation and noted that inflation could become significantly volatile in the short term.

The crash in the Lira got a massive 50% boost last Monday after President Tayyip Erdogan revealed a scheme to protect lira deposits against volatility and promised state-backed market interventions.

Turkey has maintained double-digit inflation standing for about four years, which has eroded Turkey’s earnings potentials and Erdogan’s support. The Turk-Is trade union confederation noted that food price spiked by 25.75% MoM in December, adding that it represented an annual rise of 55%, the highest rise in food inflation since 1987.

Interestingly, the CBRT’s year-end inflation forecast was 18.4% in an October report. Also, the government forecasted end-of-year annual inflation of 16.2% in 2021.