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Expectations for inflation in Türkiye 12 months from now fell in August among households, market participants and businesses, a central bank survey showed on Tuesday, an improvement that a top official said supports the country’s disinflation path.
The households’ expectations fell by 0.4 percentage points to 54.1%, the Central Bank of the Republic of Türkiye (CBRT) said. That marks the lowest level since November 2021.
The share of households expecting inflation to fall over the next 12 months rose by 1 percentage point to 27.6%.
Market participants’ expectations dropped 0.6 percentage points to 22.8%, while the real sector’s outlook declined 1.3 percentage points to 37.7%.
The central bank has repeatedly cited expectations as one factor determining the course of its monetary policy.
Treasury and Finance Minister Mehmet Şimşek said expectations had improved significantly compared with a year earlier, stressing that the improvement supports disinflation.
Şimşek said the real sector and households’ expectations declined by 16 and 19 percentage points, respectively, compared to the same period of last year.
“The improvement in expectations is supporting the disinflation process. We will continue to implement our (medium-term) program with determination to ensure lasting price stability,” the minister wrote on social media platform X.
Implemented since 2023, the program has mainly centered around tight monetary policy to curb inflation, which has more than halved over the last year.
Latest official data showed inflation slowed to 33.5% in July, the lowest rate since November 2021, having peaked at 75% in May last year.
New medium-term program due
President Recep Tayyip Erdoğan highlighted the improvement after a Cabinet meeting late Monday, saying inflation expectations were easing across all segments.
“Inflation has been decreasing for 14 months in a row. Inflation forecasts are growing more positive in all circles,” Erdoğan said.
He described 2026 as a reform year for the economy and said preparations were nearly complete for the new three-year medium-term program, which he said is due to be unveiled in the first week of September.
He added that the macroeconomic stability and reform program pursued over the past two and a half years had successfully passed “stress tests,” pointing to falling domestic and external borrowing costs and strengthening confidence in the Turkish lira.
“Viewing 2026 as the year of reforms in the economy, we are rapidly making our preparations concerning the reforms we will be implementing,” Erdoğan noted.
Buoyed by the ongoing downward trend in inflation, the central bank returned to a rate-cutting cycle last month that was disrupted by political turmoil earlier this year, lowering its one-week repo rate by 300 basis points to 43%.
The bank had hiked the policy rate to 46% from 42.5% in April and lifted its overnight lending rates to 49% following market volatility over the arrest in March of Istanbul Mayor Ekrem Imamoğlu.
Imamoğlu was jailed pending trial over graft charges.
Before April, the CBRT had gradually cut the rate from December as inflation eased.
The central bank separated its official inflation target from its forecasts last month. It kept its target for this year at 24%, even though it is forecasting inflation of between 25% and 29%.
Previously, it presented the target as the midpoint of the forecast range. Separating the goal and the range could give markets a clearer indication of where policy might be heading.
The bank is aiming to cut inflation to 16% by the end of next year and 9% by end-2027, according to its estimates.
