Turkey's Central Bank revises year-end inflation forecasts

Turkey's Central Bank on Thursday revised its year-end inflation forecast upwards.

Annual inflation is projected to hit 42.8% in Turkey by the end of 2022 and 12.9% by the end of 2023, Central Bank Governor Sahap Kavcioglu told a meeting held to release the bank’s second quarterly inflation report this year.

The previous expectations were 23.2% for 2022 and 8.2% for 2023.

The bank also predicted that the end-2024 inflation will hit 8.3%.

The annual inflation rate was 61.14% in March and 36.08% in December.

The upward revision was led by Turkish lira-denominated import prices, and inflation in food and energy prices.

The bank's estimates were 49% for the food inflation for the end of this year, and 15% for 2023, increasing from its estimates in January of 24.2% and 10%, respectively.

Import prices are also expected to increase by 22.2% at the end of this year, while decrease by 7% at the end of 2023.

The estimates were $102.2 and $93.9 for oil prices for the end of 2022 and 2023, respectively.

Kavcioglu said that in the first quarter of the year, the rise in global commodity prices, especially energy and food, were the main reasons for the rise in inflation..

In addition to the increase in import prices, the high level of transportation costs and supply problems continue to affect the inflation outlook negatively, he said.

He recalled that with the geopolitical developments that turned into a hot conflict at the end of February, international food prices, especially wheat and sunflower, reached historic highs.

In addition to geopolitical problems, China's tightening of pandemic measures limits recovery and keeps transportation costs at high levels, he added.

He stressed that inflation will decrease gradually with monetary policy and the restoration of global peace.