Türkiye’s annual inflation rate fell to 44.38 percent in December 2024 from 47.09 percent in November, posting the seventh consecutive decline since June 2024.
According to official data from TurkStat, the consumer prices index rose at the slowest pace since May 2023 to 1.03 percent in December, cooling from 2.24 percent in November. December’s figure was below the market expectation of 45.21 percent.
“Our top priority is to solve our citizens’ financial difficulties. In this regard, we have created the necessary policy framework and continue to implement the disinflation program with determination,” said Turkish Treasury and Finance Minister Mehmet Simsek in a statement on social media platform X.
Transportation prices witness strongest decline
The lowest annual inflation was seen in Türkiye’s transportation prices at 25.88 percent, while the highest rate was posted by education at 91.64 percent. Food and non-alcoholic beverage prices decreased to 43.58 percent year-on-year in December, compared to 48.57 percent in November.
In December 2024, clothing and footwear was the group that saw the highest monthly decrease of 0.67 percent. On the other hand, furnishings and household equipment was the main group with the highest monthly increase of 2.78 percent.
“In December, inflation was 1 percent, the lowest level in the last 19 months. Annual inflation fell to 44.4 percent, 2.4 points above the central bank’s forecast range announced in November 2023. Thus, inflation in 2024 fell by 20 points compared to the end of 2022 and 2023,” Simsek added.
The finance minister also confirmed that the decline in Türkiye’s inflation will continue. He also expects inflation to be in line with the 2025 target with the increasing support of fiscal policy, the decrease in rigidity in services inflation, and the improvement in expectations.
The central bank expects inflation to fall to 21 percent by the end of 2025.
Read: Oman forecasts $29 billion public revenue for 2025, 1.5 percent increase from 2024
Central bank to cut rates further in 2025
The central bank of Türkiye began its easing cycle last week with a 250 basis point rate cut, bringing interest rates down to 47.5 percent. As inflation continues to decline, the central bank may cut rates by another 250 basis points in its meeting this month.
The rate, last cut in early 2023, had been held at 50 percent since March. Annual inflation dipped to 47.09 percent in November, signaling a sustainable fall toward the 5 percent target over the next few years. The recent 30 percent increase in minimum wage, which is small in comparison to previous hikes in Türkiye, will likely further reduce core inflation.
The decline in inflation and rates comes following two years of economic volatility with annual inflation reaching 85 percent in 2022 and 75 percent earlier this year. The Turkish lira plunged 90 percent in seven years, from 3.8 to 35.3 liras to the dollar, severely impacting earnings and savings.
Following the release of the latest inflation data, the Turkish lira is trading at 35.36 liras to the dollar.
