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This article was originally written for Türkiye Today’s weekly economy newsletter, Turkish Economy in Brief, in its Nov. 3 issue. Please make sure you are subscribed to the newsletter by clicking here.
Inflation remains a central issue in Türkiye’s economy, with the inflation figures for October, released today, showing a monthly rate of 2.55% and an annual inflation rate of 32.87%. These numbers indicate that inflation continues to maintain its resilience.
In September, the monthly CPI was 3.23%, surpassing expectations, leading to an increase in inflation expectations. According to the results of the “October Sectoral Inflation Expectations” survey conducted by the Central Bank of the Republic of Türkiye, the annual inflation projections for the next 12 months are as follows:
While the increase in household expectations is particularly noteworthy, the central bank’s most recent summary of its Monetary Policy Committee meeting also stated, “Data shows that the disinflation process is slowing down. Recent price developments, especially in food, have highlighted the risks they pose on inflation expectations and pricing behavior.”
This trend led to a more modest 100-basis-point rate cut at the October Monetary Policy Committee meeting.
Meanwhile, Finance Minister Mehmet Simsek, in a speech at the Finance Summit last week, stated that Türkiye’s disinflation process continues. He said, “Inflation was around 65% in 2023, dropped to 44% last year, and now stands at 33% this year. These are improvements.”
Minister Simsek mentioned that various factors, such as drought, agricultural frost, regional wars, global trade wars, and some domestic developments, were not anticipated when the economic program was created, but “Despite all these, disinflation continued and will continue. However, it seems difficult to reach the 25-29% inflation band for the year-end inflation target. The figures from the last one or two months will not change either the perception or reality, as the conditions for disinflation remain favorable.”
Minister Simsek also emphasized that the fight against inflation is not solely a monetary policy issue and stated that supply-side measures, such as those in the housing sector, are also being implemented.
Looking ahead, the inflation data for November and December are crucial. If these figures fall below 2% on a monthly basis, the process of inflation decline can be seen as continuing on a “healthy path.”
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