Evaluating the inflation figures announced today, Vice President Cevdet Yılmaz said that they expect the downward trend in inflation to continue.
Stating that they expect the factors supporting the disinflation process to become more evident in the second half of the year, Yılmaz said the following.
“We continue to progress with our determined and holistic policies in the fight against inflation, which is the main priority of our economic program. Consumer inflation was realized as 0.99 percent in June, and annual inflation decreased to 32.11 percent. The decline in the monthly inflation rate was determined by the developments observed in food and service items. The continued decline in fresh vegetable and fruit prices supported the positive outlook in food inflation. In the service sector, while the price increase weakened compared to last month, it also decreased on an annual basis.
The prices of transportation services, which increased in the previous period due to the energy shock caused by geopolitical developments, displayed a moderate outlook in June as the decline in fuel prices and the effects of the holidays disappeared. Rent inflation continued its downward trend on an annual basis. We expect the factors supporting the disinflation process to become more evident in the second half of the year.
The normalization trend in global conditions and the fact that peace and diplomacy steps aimed at reducing geopolitical tensions limit the pressures on energy and commodity prices support the outlook regarding external cost conditions. In addition, following the adverse climatic conditions such as drought and frost that put pressure on agricultural production and food prices last year, a more favorable outlook this year may support food inflation through the improvement in agricultural supply conditions.
Low volatility in the Turkish lira and increased predictability also contribute to the disinflation process through pricing behavior and the expectation channel. Volatility in energy and commodity prices due to geopolitical developments may occasionally lead to slowdowns in the disinflation process.
Despite the shocks in question, the main downward trend in inflation is expected to continue, thanks to the macro-financial stability provided by the monetary, fiscal and income policy mix that we carry out in coordination. In this regard, we will continue to implement with a strong will the structural transformation steps that will increase the competitiveness of the Turkish economy and strengthen its sustainable growth capacity by resolutely continuing our policies that center on productivity increase, encourage high value-added production, and support the investment, production and export-oriented growth approach.”
