Turkey’s annual inflation slowed to 43.68 percent in April, official data showed on Wednesday, easing ahead of elections that polls show President Tayyip Erdoğan risks losing largely due to a cost-of-living crisis, Reuters reported.
Unorthodox rate cuts sought by Erdoğa sparked a currency crisis in late 2021, sending inflation (TRCPIY=ECI) to a 24-year peak of 85.51 percent last year. It fell in December and had reached 50.51 percent by March with a favorable base effect and relatively stable lira.
The consumer price index (CPI) rose 2.39 percent in April from a month earlier (TRCPI=ECI), the Turkish Statistical Institute (TurkStat) said. The official numbers were slightly less than predicted, with a median monthly estimate of 2.60 percent and an annual forecast of 44 percent in the latest Reuters poll.
However, the official rate of inflation is disputed by independent economists from the ENAG research group, which estimates that consumer prices in April stood at 105.19 percent with a 4.86 percent increase.
ENAGrup Consumer Price Index (E-CPI) increased by 4.86% in April, 2023
E-CPI increased by 105.19% in the last 12 months
— ENAG (@ENAGRUP) May 3, 2023
The cost-of-living crisis has eaten away at household savings and also at Erdoğan’s popularity ahead of the presidential and parliamentary elections on May 14, seen as the president’s biggest test in his 20-year reign.
Some polls show Erdoğan trailing his main opponent Kemal Kılıçdaroğlu.
The base effect that helped lower the annual reading so far this year is expected to wear off in the coming months, and economists say inflation could rise again. The year-end median estimate was 46.5 percent in the Reuters poll.
Haluk Bürümcekçi, of Bürümcekçi Consulting, predicted that annual inflation could decline until June due to the base effect.
“Annual CPI could decrease to at most around 40 percent levels in the first half of the year and end up in the range of 50-55 percent for the year,” he wrote in a note.
Bürümcekçi also said “there is uncertainty regarding the balance point of exchange rates and interest rates for the second half of the year due to the elections.”
Some economists expect a return to orthodox monetary policy after the election no matter the outcome, but Erdoğan has recently said interest rates will continue to decline as long as he is in power.
Annually, the biggest increase was seen in the health sector with 66.62 percent, followed by restaurants and hotels with 66.41 percent and food and non-alcoholic beverages with 53.92 percent.
On a monthly basis, communication prices rose 5.93 percent, restaurant and hotel prices rose 4.24 percent and food and non-alcoholic beverage prices rose 3.95 percent
The domestic producer price index was up 0.81 percent month-on-month in April for an annual rise of 52.11 percent, the data showed.