Turkey Inflation Rate Slows More Than Expected

The annual inflation rate rose to 32.61% in May 2026 from 32.37% in the previous month, exceeding market expectations of 32.5%. It marked the highest reading since October 2025, as prices continued to be weighed down by the energy shock stemming from Middle East tensions. Reflecting heightened uncertainty, the central bank recently suspended its year-end inflation forecast range, citing "a period of high uncertainty," while maintaining a year-end inflation target of 24%. The central bank also tightened liquidity conditions by suspending funding through its main policy rate and shifting to the more expensive overnight lending rate of 40%. Price pressures intensified for food and non-alcoholic beverages (34.86% vs 34.55% in April), while inflation eased slightly for housing (45.59% vs 46.6%) and transport (34.29% vs 35.06%). On a monthly basis, consumer prices rose by 1.71%, slowing sharply from 4.18% in April and marking the weakest monthly increase since December 2025.

The annual inflation rate jumped to 32.37% in April 2026 from 30.87% in the previous month, surpassing market expectations of 31.25%. It marked the highest reading since October 2025, as prices accelerated across most major sub-indices, particularly food and non-alcoholic beverages (34.55% vs 32.36% in March), housing and utilities (46.6% vs 42.06%), and transport (35.06% vs 34.35%). Other categories also contributed to overall price growth, including clothing and footwear (9.66% vs 7.2%), furnishings and household goods (21.42% vs 20.52%), and health (33.02% vs 29.98%). Rising inflation is increasingly being shaped by external headwinds, particularly the prolonged Middle East war, which has pushed global oil prices higher. For Turkey, a net energy importer, the surge in energy costs is adding further strain to an already elevated inflation environment. On a monthly basis, consumer prices climbed to a three-month high of 4.18%, from 1.94% in March and above expectations of 3.28%.

The annual inflation rate in Turkey eased to 30.87% in March 2026, down from 31.53% in February which was the highest level since October 2025, and below market expectations of 31.4%. The softer-than-expected reading suggests that anticipated increases in fuel prices, along with weather-related pressures on food inflation, have so far been more subdued. A slowdown was seen in prices for food and non-alcoholic beverages (32.36% vs 36.44% in January), housing (42.06% vs 42.33%), education (51.97% vs 55.78%), and hotels, cafes and restaurants (31.66% vs 32.93%). On the other hand, prices rose faster for transport (34.35% vs 28.86%), health (29.98% vs 29.26%), information and communication (24.12% vs 22.41%), recreation and culture (27.4% vs 27.24%). Compared to the previous month, the CPI increased 1.94%, the least in three months and compared to 2.96% in February and forecasts of 2.32%. Transport recorded the biggest increase (4.52%) and made the largest impact.