BY ALAATTIN AKTAS
Central Bank Governor Hafize Gaye Erkan presented the last inflation report of 2023.
The inflation forecast, which stood at 58% for 2023 in the previous report, rose to 65%, in line with the OVP.
The bank upgraded the inflation forecast for 2024 from 33% to 36%.
There is a significant change in the forecast interval. The upper and lower limits, which were 54% and 62%, respectively, in the previous report for 2023, fell to 62% and 68%, respectively, in the new report.
The upper and lower limits for inflation, which were 28% and 38%, respectively, in the previous report for 2024, rose to 30% and 42%, respectively, in the new report. This development shows that the uncertainty dimension has increased for 2024.
Erkan pointed to two months when inflation will rise. One of them is November, when natural gas consumption will increase due to cold weather, and the monthly natural gas consumption of 25 cubic meters met by the government will be exceeded. That will result in a hike in CPI beyond the standard increase.
May 2024 will be critical. Monthly inflation rose by 0.04% in May 2023 as natural gas prices weren’t considered in CPI. The annual CPI will rapidly increase in May 2024 as there won’t be such a slight increase and base effect.
Erkan stated that. She said the annual CPI hike will hover around 70-74% in May 2024, which will be the peak.
Then, how CPI will decrease from 74% to 36%?
The CPI stood at 1,300.60 in May 2023. It will rise to 2,263.04 in May 2024, considering the annual inflation increase of 74%.
The CPI was 1,128.45 in December 2022. It will rise to 1,861.094 in December 2023, considering the 2023 inflation forecast of 65%.
Considering the 2024 inflation forecast of 36%, the CPI will be 2,532.24 for December 2024 if we raise the CPI of 1,861.94, estimated for December 2023, by 36%.
The CPI of 2,263.04 in May 2024 will increase to 2,532.24 in December 2024. So, the estimated 7-month hike is 11.90%.
Is it difficult for inflation to surge by 11.90% in June-December 2024?
Inflation rose by 27.91% in June-December 2021 and 27.11% in June-December 2022 and is expected to increase by 43.16% in June-December 2023.
To achieve 11.90% will be possible if the monthly average increase can be kept at 1.6%.
Holding monthly inflation at 1.6% with high expenditures until the 2024 local elections…
That will be fantastic if it happens!
A pretext will be found if it doesn’t happen!