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Turkey's Inflation Rate Drops to 64.27% in December

According to official data released by the Turkish Statistical Institute, Turkey's inflation rate decreased to 64.27% in December.

Turkish Woman Showing Electricity Bill
Turkish Woman Showing Electricity Bill

This decrease was due to a favorable base effect, following a peak of 85.5% in October. The base effect was caused by a 13.6% month-on-month increase in consumer prices in December 2021.

A Rise in Health Sector Prices Leads December Consumer Price Increase

In December, consumer prices rose 1.18% month-on-month, with the biggest increases seen in the health sector, at 5.91%. Prices for key food and non-alcoholic drinks also rose by 1.86%. In contrast, transport prices dropped 4.14%.

Lira Remains Stable Despite Inflation and Currency Crisis

Despite the high inflation rates and a currency crisis that caused the lira to lose 44% of its value against the dollar in 2021 and an additional 30% in 2022, it remained mostly stable in the last quarter. It was unchanged at 18.7255 against the dollar after the release of the December inflation data.

Elevated Inflation Expected to Continue in 2023

According to a Reuters poll, inflation is expected to remain elevated this year, ending 2023 at 43.2%. This is almost twice the level the government forecasts and could lead to continued cost-of-living strains for Turkish citizens. These strains could be particularly relevant as Turkey prepares for tight presidential and parliamentary elections in June.