Central Bank of the Republic of Turkey (CBRT) revised inflation forecasts in a report presented by Governor Murat Çetinkaya on Tuesday.
Speaking at the presentation of the Third Inflation Report in 2018 in Istanbul, CBRT Governor Çetinkaya said the revision was made due to a number of reasons that included increasing oil prices, a rise in import prices, food inflation and deterioration in pricing behavior.
The inflation rate prediction at the end of 2018 increased to 13.4 percent, up from 8.4 percent in April. The Central Bank estimates inflation to land between 12.5 percent and 14.3 percent with 13.4 as the midpoint, with 70 percent probability.
CBRT also raised the estimate for the end of 2019 to 9.3 percent from 6.5 percent in April. The estimate puts the figure between 7.6 percent and 11 percent, with 70 percent probability.
Çetinkaya said the inflation rate is projected to gradually move towards the bank's medium-term target of 5 percent under a tight monetary policy stance and enhanced policy coordination.
CBRT updated its food price inflation to 13 percent from 7 percent in 2018. In 2019, they also increased the estimate, though less significantly, to 10 percent from 7 percent. Çetinkaya said the sharp rise in food prices alone added 1.4 points to the year-end overall inflation forecast.
The tendency to increase prices beyond the demands and cost pressures in the economy has also strengthened considerably, Çetinkaya added.
The Central Bank expects economic activity will continue to stabilize in the second half of 2018, he said.
He said the Central Bank continues to closely monitor the pricing behavior, global risk appetite, fiscal policy and the lagged effects of monetary policy, and will review its monetary policy stance as necessary.
The country's annual inflation increased to 15.39 percent in June, up from 12.15 percent in May, according to the latest report from Turkish Statistical Institute (TurkStat) on July 3.
The bank also increased its oil price forecast to $73 per barrel for both 2018 and 2019 from $68 and $65, respectively, over a previous report.
Turkey is an oil importing country which benefited from lower oil prices in recent years.