Inflation in Türkiye dropped more than expected in July to reach the lowest level in almost four years, according to data on Monday that officials say reinforces official forecasts that price growth will slow further by year-end.
Consumer price inflation softened to 33.52% from 35.05% in June, the Turkish Statistical Institute (TurkStat) said. That was the lowest rate since November 2021, when prices had risen 21.31%. The rate was forecast to slow to 34.05%.
"Inflation is at the lowest level in 44 months," Treasury and Finance Minister Mehmet Şimşek said, adding that the rate had dropped by 28.3 percentage points in the past 12 months.
Şimşek said that the disinflation is in line with targets and that year-end inflation will be within the central bank's forecast range.
Month-over-month, inflation was 2.06%, driven by what Şimşek said were temporary and seasonal factors. In June, the monthly consumer price index was 1.37%.
The annual price growth in food and nonalcoholic beverages eased to 27.95% from 30.2%. Similarly, price growth in housing and utilities moderated to 62.01% from 65.54%.
Alongside housing, the yearly surge in prices was led by education, with 75.5%, and health, with 37.49%.
The lowest rates were posted in clothing and footwear with a 10.67% increase, communications at 19.62% and transport at 26.57%.
For the first time in over three years, service inflation fell below 50%, Şimşek said in a post on the social media platform X.
"The decline in inflation will enhance predictability, contributing to further improvement in domestic financial conditions and the investment climate," he noted.
"We will continue to resolutely implement our program to achieve lasting price stability, our primary priority."
More than a week ago, the Turkish central bank cut its key policy rate by 300 basis points and relaunched an easing cycle, while saying that leading indicators suggested a temporary rise in monthly inflation in July due to month-specific factors.
A midyear hike in fuel and tobacco prices, as well as a rise in natural gas prices, had been expected to drive monthly inflation.
Transport prices rose 2.89% month-over-month and alcoholic drinks and tobacco prices rose 5.69%, the data showed. Housing prices were up 5.78%.
Cevdet Yılmaz, the Turkish vice president, said the decline in annual inflation continues to be "significant."
Inflation has dropped by approximately 42 percentage points since it peaked at more than 75% in May last year.
"This outlook demonstrates the effectiveness of our program and that our policies have restored balance to the economy," Yılmaz wrote on X.
The central bank's year-end inflation midpoint estimate currently stands at 24%, in a forecast range of 19% to 29%.
With strong coordination, structural transformation, determined implementation and continued predictability in the economy, Yılmaz said Türkiye aims to reduce inflation to the 20% range by the end of the year and permanently increase the well-being of the nation within price stability.
"We will continue to pursue balanced growth within stability, increase employment, and boost exports through investments that enhance value added and productivity," he added.
Another report from the statistical office on Monday showed that producer price inflation eased slightly to 24.19% in July from 24.45% a month ago.
Prices of mining and quarrying climbed 28.3%, and manufacturing reported a 24.02% rise.
Producer prices of electricity, gas, steam and air conditioning grew 22.1% and surged 55.74% for water supply.
Month-over-month, producer prices moved up 1.73% after rising 2.46% in the prior month.
