Turkey's Inflation Surpasses 75% with Relief in Sight

Turkey's annual inflation rate surged to 75.5% in May, according to the Turkish Statistical Institute (TurkStat). This increase, driven by rising prices in education, housing, and restaurants, marks the peak of a prolonged cost-of-living crisis. Monthly inflation for May was recorded at 3.37%, slightly up from April's 3.18%.

The Central Bank of the Republic of Türkiye (CBRT) had anticipated this inflationary surge, projecting it to hover between 75-76%. Since June last year, the CBRT has raised its policy rate by 4,150 basis points, including a 500 basis point hike in March due to worsening inflation expectations. The bank has held rates steady since then but has indicated readiness to tighten further if inflation deteriorates significantly.

International Monetary Fund forecasts suggest Turkey's inflation could end the year at 38%, potentially making it the world's sixth-fastest. Investor interest in Turkish assets has surged recently, focusing on local bonds and credit default swaps as the country's monetary policy normalization deepens. Fiscal adjustments by the government are expected to play a crucial role in shaping future inflation trends.