According to TUIK, the inflation rate in May was 3.37% monthly and 75.45% annualized. ENAG announced monthly inflation at 5.66% and annual inflation at 120.66%. With the inflation in May, the inflation gap for civil servants, retired civil servants, SGK and Bakur retirees has started to take shape.
The Turkish Statistical Institute (TUIK) released inflation statistics for May. According to TUIK, the monthly increase in the Consumer Price Index (CPI) was 3.37%. The annual inflation rate announced in the previous month at 69.8% rose to 75.45% in April. The inflation rate for the first five months of the year was measured at 22.72%. Once the five-month inflation was determined, the salary increases given to civil servants and retirees were also determined according to the six-month inflation.
The Central Bank of the Republic of Turkey (CBRT) included in its inflation report a forecast that inflation will peak in May and will be around 75-76% due to base effects and the effects of natural gas prices. The CBRT and economic management authorities expect the inflation process to begin next month. Even if prices do not fall, the rate of price increases is expected to slow down.
Pay increase tables for pensioners and civil servants also announced
The May inflation statistics will also have a decisive impact on the inflation differentials between civil servants, retired civil servants, SGK and Bakur retirees.
The five-month inflation rate for January-May was announced to be 22.72 percent. Retirees at SGK and Bakr will receive a salary increase based on the six-month inflation rate after the inflation rate is determined in June.
According to the collective bargaining agreement, current and former civil servants are entitled to a 10 percent salary increase, plus an increase in line with the amount of inflation above 15 percent. Therefore, the five-month difference will be reflected in the salaries of current and former civil servants at a level of 17.72 percent.
Rent increase rate also announced
The 25% increase in the residential rent cap, which has been in place for two years, will end on July 1, 2024. Finance and Treasury Minister Mehmet Şimşek said he “sees no reason to continue this practice” and that the end of the practice will mean that average inflation data will be taken into account in renewed lease contracts. The 12-month inflation rate in May was measured at 62.51%.
Core inflation was below headline inflation
Group C inflation, known as core inflation, which excludes food and energy, was reported at 3.76 percent for the month and 74.98 percent for the year. The fact that core inflation is high is interpreted as a continuation of the upward trend in inflation. Core inflation was below headline inflation, according to TUIK data.
Clothing and shoes see the biggest price increases
Clothing and footwear had the highest price growth rate in May at 9.60%. Housing inflation at 7.08%, education inflation at 5.63%, restaurants and hotels inflation at 5.52%, and alcoholic beverages and tobacco inflation at 4.74% all outpaced headline inflation for the month.
The major groups that showed the highest increase compared to the same month last year were education (104.80%), housing (93.21%) and restaurants and hotels (92.94%).
According to ENAG, the annual inflation rate is over 120%
Data from the independent Inflation Research Group (ENAG) showed consumer prices rose 5.66 percent in May from the previous month, bringing the annual inflation rate to 120.66 percent.
According to ENAG, the highest price increases were for household goods at 11.39 percent and clothing and footwear at 11.11 percent. ENAG noted that health expenditure prices remained unchanged in May, similar to the previous two months.
Minister Simsek: “The worst is over”
In a statement on the X-account, Finance Minister Mehmet Şimşek assessed inflation in May as “the worst is over.”
Minister Şimşek said annual inflation, including the cumulative effect of the past 12 months, reached its highest level this month, adding: “The transitional period in the fight against inflation has thus ended and we are entering the de-inflation process.”
Stating that a permanent decline in inflation will begin in June, Şimşek made the following assessment:
“Annual inflation will most likely fall below 50 percent by the end of the third quarter. The market is anticipating disinflation and expects annual inflation to be 33.2 percent after 12 months and 21.3 percent after 24 months. The next period will see expectations move closer to our target. Our support for the de-inflation process will continue to increase by strengthening fiscal discipline. Achieving price stability will require patience and time, but we are determined to achieve our target.”
The worst is over!
This month saw the highest annual inflation rate, which includes the cumulative effect of the past 12 months. Thus, the transitional period in fighting inflation has been completed and we are entering the de-inflation process.
The permanent decline in inflation will begin in June. The annual inflation… pic.twitter.com/oA2OPrMr87
— Mehmet Simsek (@memetsimsek) June 3, 2024
