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Inflation expectations for the next 12 months diverged sharply in Türkiye in July, with households raising their forecast to 54.5% and market participants and the real sector lowering theirs to 23.4% and 39%, respectively.
This growing gap in sentiment was reported in the Central Bank of the Republic of Türkiye’s (CBRT) latest Sectoral Inflation Expectations survey, which showed that household expectations rose by 1.5 percentage points from June, while market and industry projections fell by 1.2 and 0.8 points, respectively.
Türkiye's inflation declined for the 13th consecutive month in June, falling to 35.05% from 75.5% in May 2024.
In contrast, households anticipate a higher inflation rate for the coming year, with expectations rising to 54.5% in July from 53% the previous month. This comes despite declining projections from financial and industrial actors. One year ago, household expectations stood at 72%.
While households expect inflation to remain elevated, the proportion of those who believe inflation will decline in the next 12 months fell to 26.6%, down from 30.7% in June.
The CBRT’s official year-end inflation target remains set at 24%, with the upper bound of the forecast range marked at 29%. Both market and household expectations continue to exceed this target, though the gap has narrowed among professional forecasters.
Since July 2024, inflation expectations have declined consistently among both market participants and the real sector. Market forecasts decreased by 6.6 percentage points, while projections from the real sector dropped by 16 points over the same period.
Household sentiment, however, followed a different path. After easing slightly in June, expectations rose again in July. Meanwhile, the share of households anticipating a decline in inflation over the next 12 months fell by 4.1 percentage points, reflecting growing public skepticism despite the downward trend in professional forecasts.
Commenting on the figures, Turkish Treasury and Finance Minister Mehmet Simsek stated that market participants’ 12-month inflation expectation had fallen to the lowest level in 43 months.
“With the comprehensive policies we are implementing decisively, we are making steady progress toward lasting price stability and sustainable growth,” he emphasized.
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