Turkey’s inflation trajectory continues its downward trend, with Central Bank Governor Fatih Karahan highlighting improvements in services inflation during a presentation in London.
The country’s annual inflation rate dropped to 44.38 percent in December 2024, marking the seventh consecutive monthly decline since June 2024. Official data revealed that annual services inflation also decreased, shedding 2.16 percentage points to finish the year at 65.73 percent.
Despite the progress, Karahan noted that backward indexation practices are keeping services inflation elevated. However, he pointed to positive developments in rent inflation, which is showing signs of a sustained decline.
“The monthly increase in rents weakened in December, influenced by seasonal factors such as lower contract renewal rates and slower increases in contract prices,” the Central Bank reported in its recent analysis of monthly price trends.
Karahan also observed encouraging shifts in inflation expectations, with improvements seen across industrial firms, corporations, and households.
Turning to broader economic dynamics, the governor highlighted a shift in growth composition toward net exports. He also noted a significant change in banking deposit trends, with the share of FX-protected accounts dropping to 5.9 percent, while Turkish Lira deposits surged to 58.7 percent by January.
The presentation reflects a cautiously optimistic outlook as Türkiye works to stabilize its economy and tackle entrenched inflationary pressures.
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