Türkiye's annual inflation slowed for the 11th month in a row to the lowest in more than three years, easing to below 38% in April, according to official data on Monday.
Consumer price rises slowed to 37.9%, down from 38.1% in March, figures from the Turkish Statistical Institute (TurkStat) showed.
Market surveys projected an annual reading of around 38%. The April rate marks the lowest level since December 2021, when prices had risen 36.08%.
The continued decline is positive, and the government expects inflation to keep falling, Treasury and Finance Minister Mehmet Şimşek said
"The fight against the high cost of living is the most important item on the agenda," Şimşek told an interview with broadcaster TGRT Haber.
"We expect a normalization after July. By the end of the year, we foresee that annual inflation will fall below 30%."
Month-over-month, consumer prices grew 3%, compared to 2.46% in March, the TurkStat data showed. Surveys had estimated a 3.1% increase on the back of energy prices and foreign exchange pass-through.
The annual rise was driven by a surge in education costs (79.2%), housing (74%), hotels and restaurants (41.8%) and health care spend (41.9%).
The price growth in food and non-alcoholic beverages eased to 36.09% from 37.12%. Similarly, furnishings and household equipment costs moderated to 30.54% from 32.41%.
Türkiye's annual inflation exceeded 75% in May 2024, before starting to slow in June amid aggressive monetary tightening as part of the government's economic program.
"We continue to establish the disinflation process thanks to our steadfastly implemented economic program," Vice President Cevdet Yılmaz wrote on the social media platform X.
Recent weeks have seen Türkiye's central bank reverse its easing cycle amid volatility after last month's arrest of Istanbul Mayor Ekrem Imamoğlu on corruption charges pending a trial, and uncertainty about U.S. tariffs.
The arrest of Imamoğlu sent the Turkish lira and assets sharply lower. The currency later recovered some losses but still stood some 5% weaker compared to before the arrest.
Economists have said that food prices and energy prices, as well as prices of items that are directly impacted by currency volatility, could impact April inflation due to the recent shake up in the market.
The central bank began to gradually cut its benchmark interest rate in December and lowered it to 42.5% in early March.
But it reversed the cycle last month with a surprise 350-basis-point rate hike to 46%, which boosted Turkish assets and signaled renewed commitment to tackling inflation.
Although market volatility in mid-March caused some deterioration of inflation expectations, the government said the impact of the turmoil is temporary and limited and inflation will be in line with the central bank's target range.
"The (economic) program's aim has been to reduce inflation for nearly two years. Annual inflation has been trending downward for the past 11 months," Şimşek said on Monday.
"Despite recent internal and external shocks, the continued decline is positive. What matters now is the next phase."
Şimşek said the government expects the downward momentum to continue and sees a high probability that inflation will remain within the target forecast range.
The central bank's year-end inflation midpoint estimate currently stands at 24%, in a forecast range of 19% to 29%.
"The impact of monetary policy has become clearly evident. This year, fiscal and revenue policies will create a more supportive effect," he noted.
"We expect the disinflation process to persist in the second half of this year."
Yılmaz said the government would "steadfastly continue" its fight against inflation "through the program we have implemented with strong coordination."
"In an increasingly uncertain global environment, we will enhance our relative performance with political stability and predictability. Our goal is to grow our economy in a stable manner and sustainably raise societal welfare levels," he noted.
Bürümcekçi Research & Consultancy said in a note that in the near term, monetary policy will be shaped by risks to financial stability rather than price stability.
"While we see a low probability that the central bank will return to rate cuts at its June meeting, we think that signals in this direction will only strengthen if the weighted average funding cost approaches 46.0% and substantial foreign-exchange reserve losses give way to steady reserve accumulation," it said.
A separate report from the statistical office showed that producer prices climbed 22.5% in April from a year ago.
This was weaker than March's 23.5% increase and marked the lowest rate since October 2020.
Prices of mining and quarrying climbed 29.59%, and manufacturing reported a 22.65% rise.
Producer prices of electricity, gas, steam, and air conditioning grew 14.45% and advanced 58.14% for water supply.
Month-over-month, producer prices moved up 2.76% after rising 1.88% in the prior month.
