Turkey’s annual inflation rate subsided slightly in June, providing another indication that price pressures have been gradually declining, but the price of housing, education and other key services continued to weigh heavily on households.
According to official data published by the Turkish Statistical Institute (TUIK), annual consumer inflation rate dropped to 32.1% in June from 32.6% in May. Consumer prices also increased at a slower pace than in the previous month, growing 0.99% in June.
Although the overall inflation rate moderated, there were a number of key spending categories that continued to see very high inflation rates over the last year.
Education had the largest year-over-year increase with costs up 46.1%. The cost of housing, along with energy costs and housing-related items, increased by 45.1%, continuing to be a significant factor in household spending pressures.
Food prices, which play a major role in the family budget, were 35.4% higher than a year before. Healthcare costs also continued to rise, posting an annual increase of 33.6%.
After spiking to very high rates during the last two years, the latest data indicate inflation is slowly moving in a downward direction. Since December of 2021, Turkey’s annual inflation rate (CPI) has been over 30 percent, reaching over 75 percent in May 2024 before gradually decreasing.
But official statistics are still under fire from independent economists.
The inflation estimates of the independent Inflation Research Group (ENAG) showed that consumer prices increased by 51.4% year-on-year in June, significantly more than the official reading from TUIK. The difference between the two sets of data has fuelled ongoing debate over the true pace of inflation and the cost of living in Turkey.
Turkey’s central bank has admitted that inflation is one of the largest economic problems in Turkey. It revised its medium term forecasts in mid-May, predicting that annual inflation will reach 26% by the end of 2026, 15% by the end of 2027 and 9% by the end of 2028.
The central bank has been stressing that its monetary policy is intended to return to price stability, and ensure sustainable economic growth. Analysts believe the future rate of inflation will be driven by domestic demand, exchange rate developments, commodity prices internationally, and the success of economic measures implemented by the government and central bank.
While recent statistics show that inflation is easing, a large number of Turkish households still have an increase in their cost of living, especially in housing, food, education and healthcare. Economists are saying that consumers won’t get any relief in their day-to-day costs until inflation eases for a prolonged period.
