Turkey annual inflation to drop to 53.5% in January, despite sharp monthly rise
Repeats with no changes to text
reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=TRCPI%3DECI for monthly poll
reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=TRCPIY%3DECI for annual poll
Year-end forecast at 41%
ISTANBUL, Jan 30 (Reuters) -Turkey's annual inflation should drop to 53.5% in January even as prices continue jumping on a monthly basis,according to a Reuters poll on Monday that also showed inflation will end the year at 41%, much higher than official expectations.
Inflation has been stoked by a currency crisis at the end of 2021 and it touched a 24-year peak of 85.51% in October. It fell sharply in December due to a base effect and a similar drop is expected in January.
The surge in prices in the same period last year spells relief for this year's annual inflation calculation early this year, but economist see the drop slowing.
They forecast inflation to end 2023 at nearly twice the 22.3% rate that the central bank forecasts, potentially extending cost-of-living strains as President Tayyip Erdogan seeks re-election in May this year.
The median estimate of 13 economists in a Reuters poll for annual inflation in January stood at 53.5%, a sharp drop from 64.27% in December. Forecasts ranged between 51.2% and 56.65%.
On a monthly basis the median estimate was 3.8%, in a range of 2.30% to 5.95%. The sharp expected monthly rise is due to a raft of administered new-year price hikes including for public transit, tobacco products, services, as well as rising food prices.
Despite soaring prices, the central bank has taken the unorthodox step of slashing its policy rate to 9% from 19% since late 2021. It said its most recent series of cuts, late last year, was meant to address an economic slowdown.
On Thursday, Central Bank Governor Sahap Kavcioglu said no basis remains for sharp price hikes in Turkey. He also stood by his previous estimate that inflation will drop to 22.3% by the end of the year.
But the median estimate of 10 economists for inflation at year-end stood at 41% in the Reuters poll, with forecasts coming in between 30% and 48%.
Erdogan's economic plan aims to achieve price stability by slashing borrowing costs, boosting exports and flipping chronic current account deficits to surpluses.
But the rate cuts sparked a late-2021 currency crash, which saw the lira lose 44% versus the dollar that year and another 30% in 2022, stoking inflation.
The price surge hit Erdogan's opinion polls, which suggest that parliamentary and presidential elections set for May will be tight. An opposition alliance promises to roll back the unorthodox economic policies if elected.
Underlining polls that show most Turks think inflation is higher than official stats show, a confederation of unions said it calculated that Ankara food prices jumped by 9.02% in January from a month earlier.
The Turkish Statistical Institute will announce January inflation data at 0700 GMT on Feb. 3.
Reporting by Ali Kucukgocmen and Ezgi Erkoyun; Editing by Jonathan Spicer
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