Prof. Dr. Duran Bülbül: Why do prices continue to rise despite the decline? What is the future of the economy in Turkey?

High inflation, which has persisted for a long time in Turkey, began to decline with the new year. According to economists, monthly inflation in Turkey could fall to around 5 percent in the first month of 2025. However, the positive change in inflation figures has not led to a decrease in consumer prices. While prices in Turkey continue to rise, there is curiosity about whether economic data will continue to improve in the coming months.

It is projected that monthly inflation in January could reach around 5 percent due to the impact of high public price hikes. However, because monthly inflation was at a high level of 6.7 percent in January of last year, the base effect will come into play, making it possible for annual headline inflation to fall below 44 percent.

Minister of Treasury and Finance Mehmet Şimşek had promised upon taking office that price stability would be achieved and inflation would decline. Şimşek, who took office in June 2023, announced in recent months that price stability had begun to be achieved.

WILL INFLATION CONTINUE TO DECLINE?

Economists expect inflation rates in Turkey to continue to decline in January with the contribution of the base effect. 

12punto columnist and economist Prof. Dr. Duran Bülbül stated that a 'gradual decline in inflation could continue' in the coming months. However, in his assessment, Bülbül emphasized that it might be difficult to 'achieve a permanent improvement' in inflation 'if fiscal policies are not implemented effectively and structural reforms are not put into effect.' 

Bülbül drew attention to the importance of taking concrete steps, especially to discipline public spending and support economic stability, and continued his words as follows:

''The impact of economic stagnation on the decline is significant. Why do prices continue to rise despite the decline? This is a separate contradiction.

The course of economic indicators will be decisive in Turkey reaching its 2024 inflation targets. Experts state that both monetary and fiscal policies must work in harmony to ensure price stability.''

News Source: 12punto