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Türkiye’s inflation outlook for the next 12 months continued to improve among financial markets and businesses in February, even after consumer prices rose faster than expected in January due to a food-driven increase.
Data released by the Central Bank of the Republic of Türkiye (CBRT) on Tuesday showed that 12-month-ahead inflation expectations declined by 0.1 percentage points to 22.1% among market participants and fell by 0.90 percentage points to 32% in the real sector compared with the previous month.
The January consumer price increase of around 4.8%, which exceeded forecasts due to supply-side food factors, did not significantly alter the broader downward trajectory in inflation expectations.
Household inflation expectations, however, remained elevated and unchanged in February. According to the CBRT’s Household Expectations Survey, which was introduced this month, households projected annual inflation at 48.81% over the next 12 months, unchanged from the previous month.
At the same time, the share of households expecting inflation to decline fell by 4.63 percentage points to 20.33%, indicating continued caution among consumers.
Food, fuel and energy remained the most cited sources of price pressure. The share of respondents identifying food as the category with the highest price increases declined slightly by 0.2 percentage points to 41.1%.
Housing price expectations also moderated, with households forecasting a 35.41% increase over the next year, down 3.82 percentage points from January. Meanwhile, households’ 12-month U.S. dollar/Turkish lira expectation declined by 0.71 to 51.56.
Local brokerage Pusula Investment said the likelihood of an increase in inflation expectations continued to decline, supporting the broader disinflation outlook.
The firm added that with the revised data, household consumer price index (CPI) expectations had comfortably fallen below the 50% threshold as of this month, creating additional room for the disinflation process.
"We continue to maintain our year-end CPI expectation at 22.9%. We view the data as limited positive for risk assets," Pusula Investment said.
Treasury and Finance Minister Mehmet Simsek said household inflation expectations had improved compared with earlier data. "We continue to implement policies that limit the reflection of temporary factors on pricing behavior, while supporting the disinflation process with supply-side measures," he remarked.
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