The Central Bank of the Republic of Turkey (CBRT) has raised its year-end inflation forecast to 23.2%, its governor announced on Thursday.
The annual consumer price index is expected to drop to 8.2% as of the end of 2023, CBRT Governor Şahap Kavcıoğlu told a meeting in the capital Ankara to present the bank's first quarterly inflation report of the year. Daily Sabah reports.
Kavcıoğlu said inflation was impacted by unhealthy price formations in currency markets and this year's forecast had been affected by lira-denominated import prices.
In its last report in October, the central bank forecast annual inflation would ease to 11.8% by the end of 2022. The annual inflation rate stood at 36.08% in December, its highest level in 19 years.
Kavcıoğlu said the bank was observing the impact of recent policy rate decisions and was reviewing policy while prioritizing the Turkish lira.
The bank has slashed the policy rate to 14% from 19% since September.
Kavcıoğlu stressed that the bank's estimate for food prices was revised up with cumulative effects of the ongoing rises in international food prices taken into account, especially the exchange rate developments and the developments in agricultural drought.
Food prices are forecast to surge 24.2% year-on-year in 2022 and 10% in 2023, he said.
Higher-than-expected inflation reading was driven by distorted pricing behavior due to unhealthy price formations in the foreign exchange market, supply side factors such as the rise in global food and agricultural commodity prices, supply constraints, and demand developments, the governor said.
The bank expects the disinflation process to begin on the back of measures taken for sustainable price and financial stability along with the decline in inflation owing to the base effect.
