President Recep Tayyip Erdoğan on Wednesday said inflation would go “upside down” in the coming months, as he pledged to free Türkiye from the cost-of-living “scourge” in 2023.
Price increases in Türkiye moderated in November, signaling that inflation pressures that have been plaguing consumers for about a year and a half might be finally easing.
Annual inflation dropped below 85% last month after touching a 24-year high in October. It is expected to decline sharply in the period ahead as a result of the base effect and falling energy prices globally.
“We will witness together how inflation will go upside down in the coming months,” Erdoğan told a parliamentary group meeting of his ruling Justice and Development Party (AK Party).
“We want to make 2023 the 100th anniversary of our republic, the turning point of our liberation from the scourge of the cost of living.”
Erdoğan stressed intensive efforts he said the government was undertaking to eliminate the causes other than cost increases leading to high inflation.
The president’s remarks were echoed by Treasury and Finance Minister Nureddin Nebati, who earlier on Wednesday said inflation would fall much more noticeably in the coming months.
“Though high inflation has hurt all of us, we have broken its neck since last month with the positive developments and the measures we have taken,” Nebati told an event in the Aegean province of Izmir.
“With the normalization of global energy prices, the implementation of policies aimed at increasing production and the improvement in expectations, we will together see that inflation will fall much more significantly in the coming months,” the minister noted.
The government has endorsed low interest rates to boost exports, production and investment and create new jobs as part of an economic program, eventually aimed at lowering inflation by flipping the country’s chronic current account deficit to a surplus.
Türkiye is almost completely dependent on imports to cover its energy needs, which leaves it particularly vulnerable to rising costs that skyrocketed following Russia’s invasion of Ukraine.
Last month, the country’s central bank wrapped up the easing cycle that saw it lowering its benchmark policy rate by 5 percentage points since August to 9% from 14%, in line with Erdoğan’s calls for stimulus.
The central bank says cuts were necessary given the signs of economic slowdown.
Erdoğan says high rates cause inflation and he had called for single-digit rates by year-end. He has said the government’s new economic model is expected to yield results in the new year.
The government has introduced several relief measures to help cushion the fallout from inflation, including a cap on rent increases, reduced taxes on utility bills, and unveiled a major housing project for low-income families.
The minimum wage was hiked twice, namely in December and July. Erdoğan on Wednesday said the new minimum wage for 2023 would be announced on Thursday.
