Annual inflation in Türkiye eased further in June to nearly 35.1%, official data showed on Thursday, continuing a downward trend amid a period of disinflation lasting since the middle of last year.
The consumer price index (CPI) came in at 35.05% in June, slowing down from 35.41% in May, the data from the Turkish Statistical Institute (TurkStat) revealed. The monthly inflation rose 1.37%, down from 1.53% in May, TurkStat said.
This marked the 13th consecutive month of easing consumer inflation and the lowest level since late 2021, bolstering the expectations for the rate cut by the central bank later this month.
The central bank kept rates steady at 46% last month, after reversing the easing cycle that it pivoted at the end of last year.
Both rates came in slightly below market estimates, which saw annual inflation at around 35.2% and monthly at 1.45%.
The highest price rises in June on a yearly basis were seen in education with 73.33%, housing 65.54% and health care 38.7%, according to TurkStat data.
On the other hand, the lowest price hikes were in clothing and footwear with 14.47%, communications with 18.43%, and recreation and culture with 27.53%.
TurkStat said there were three main expenditure groups with the highest weight: food and non-alcoholic beverages with annual inflation of 30.2%, along with transportation with 27.72% and housing with 65.54%.
"The contributions of these main groups to the annual change were 7.60% for food and nonalcoholic beverages, 4.51% for transportation and 9.22% for housing," it added.
The monthly increase in prices, similarly was also led by education with 4.48%, the data revealed. It was followed by the housing at 2.62% and transport at 2.38%.
Commenting on the data, Treasury and Finance Minister Mehmet Şimşek said that monthly inflation in June was 1.37% despite rising oil prices due to geopolitical tensions.
Oil prices fluctuated amid the escalation of conflict and attacks between Israel and Iran, rising considerably compared to previous months before settling again as tensions eased.
"In services, where inertia is high, annual inflation dropped to 50% after three years," Şimşek said on X.
"Our determination in the disinflation process has become evident in both actual data and expectations," he added.
In recent times, declining commodity prices and reduced volatility in financial markets improved inflation expectations, the minister further said, adding that "supportive demand conditions will contribute to the continued decline in inflation in the second half of the year."
"Our citizens can rest assured; a noticeable slowdown in inflation has begun across various sectors, from food and durable consumer goods to education and transportation, and this trend will continue," he added.
His view was echoed by Vice President Cevdet Yılmaz, who in a post on X reiterated the government's expectation to see inflation in the 20s range by the end of the year.
"The main trend of inflation continues to decline, and with the improvement in expectations, the decrease in inflation has been ongoing uninterrupted for 13 months since June 2024," Yılmaz wrote on X.
Moreover, he said that with monthly inflation at 1.37%, this rate has remained below 2% for two straight months, while annual inflation decreased by over 40 points compared to June last year.
The Turkish central bank kept the forecast for inflation to drop to 24% by the end of 2025 in its last quarterly inflation report, keeping the wider window range between 19% and 29%, respectively. It will convene for the rate-setting meeting on July 24.
"We are closely monitoring the potential impacts of geopolitical developments and increasing protectionism in global trade on the disinflation process, and we are conducting our analyses based on all possible scenarios," Yılmaz noted.
"Thanks to the economic program we are implementing and our determined stance on reducing inflation, we aim to reach inflation in the 20s by the end of this year and single-digit inflation in the coming period, thereby ensuring lasting prosperity for our citizens," he concluded.
