Turkish Inflation Slows More Than Expected

The annual inflation rate eased to 32.11% in June 2026 from 32.61% in the previous month, in line with market expectations. This marked the lowest level since March, driven by slower price increases in housing (45.14% vs. 45.59% in May) and transportation (31.15% vs. 34.29%). Cost increases also moderated across several categories, including furniture and household goods (22.32% vs. 22.36%), health (33.62% vs. 32.94%), education (46.10% vs. 50.06%), and information and communication (25.57% vs. 25.58%). In contrast, inflation continued to rise for food and non-alcoholic beverages (35.45% vs. 34.86%), and restaurants and accommodation services (31.61% vs. 31.59%). The softer inflation reading reinforces expectations that the central bank could resume its easing cycle after keeping monetary conditions tight since March. On a monthly basis, consumer prices eased by 0.99% in June from a 1.71% increase in May and marking the smallest gain in six months.

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%.