Turkey’s inflation passed 75% which economists consider to be the peak

Inflation in Turkey peaked at 75% in May, from 69.8% in April, which economists expect to be the peak before prices begin to ease.

Consumer prices rose 75.45% in May year-on-year and 3.37% month-on-month, according to the Turkish Statistical Institute, a government agency.

The sector that saw the steepest annual price increase was education at 104.8%; housing in 93.2%; and hotels, cafes and restaurants at 92.9%.

Economists previously estimated that inflation in the country of 85 million people would reach about 75%. Turkey has been on a year-long journey to steadily raise interest rates in an effort to reduce prices, resulting in significant financial difficulties for the average Turkish consumer.

Turkey’s central bank has kept interest rates at 50% since March, citing the continued need to fight rising inflation in the country. The bank said that “a tight monetary stance will be maintained until a significant and sustained decline in monthly inflation trends is observed.”

The monthly CPI increase of 3.4% in May was higher than in March and April, leading some analysts to expect a less immediate trajectory of price declines.

“We believe that inflation has now peaked but, with today’s release containing some unpleasant surprises, the pace of disinflation in the second half of the year looks more uncertain,” Liam Peach, senior emerging market economist at London-based Capital Economics, wrote in research notes.

The company had previously expected inflation to fall to 41% by the end of the year, while Turkey’s central bank expected it to reach 38% by then.

Based on the current acceleration of inflation, “it is now possible to end the year slightly higher,” wrote Peach, adding that “a longer pause in interest rates is likely for some time.”

The jury among economists remains mixed on whether Turkey’s central bank will cut interest rates later this year or wait until 2025..