Households in Turkey revise their inflation expectations, contradicting market and industrial projections
In the world of football, Besiktas suffered a 4-2 defeat to Shakhtar Donetsk in a Europa League qualifier, marking a disappointing start to the season. Meanwhile, in the economic sphere, Turkey has seen a significant decline in inflation over the past year.
According to the Central Bank of the Republic of Turkey (CBRT)'s Sectoral Inflation Expectations survey, inflation expectations have been declining among market participants and the real sector. Market participants' expectations for inflation in 12 months fell to 23.4% in July, the lowest in nearly four years, while real sector expectations declined to 39.0%. However, household inflation expectations rose to 54.5%, with fewer households expecting inflation to fall over the next year.
As of July 2025, the current annual inflation rate in Turkey stands at around 35%, having eased to 35.05% in June from 35.41% in May, marking the thirteenth consecutive month of easing and the lowest level since November 2021. Monthly inflation increases have also moderated, with June 2025 monthly CPI rising only by 1.37%.
The CBRT’s official year-end inflation midpoint forecast for 2025 is 24%, within a forecast range of 19% to 29%, reflecting expectations of continued decline from current levels. This depicts a clear trend of easing inflation over the past year, though with differing inflation expectations between households and market participants, and with inflation still elevated relative to many global peers.
Turkish Treasury and Finance Minister Mehmet Simsek emphasized that with comprehensive policies, Turkey is making steady progress toward lasting price stability and sustainable growth. He stated that market participants' 12-month inflation expectation has fallen to the lowest level in 43 months.
In summary:
| Measure | Value (July 2025) | Notes | |-----------------------------|---------------------------------|----------------------------------------| | Current annual inflation | ~35% (June 2025) | Eased from 35.41% in May 2025 | | Market participants' 12m expectation | 23.4% | Lowest in nearly 4 years | | Real sector 12m expectation | 39.0% | Slight decline | | Household 12m expectation | 54.5% | Slight rise, indicating higher expected inflation by households | | CBRT official end-2025 forecast | 24% midpoint (range 19%-29%) | Reflects expected continued disinflation|
- Turkish Treasury and Finance Minister Mehmet Simsek praised the progress Turkey has made in attaining lasting price stability and sustainable growth, highlighting that the market participants' 12-month inflation expectation has dropped to its lowest level in nearly four and a half years.
- Amidst this economic improvement, President Recep Tayyip Erdoğan, the leader of Turkey (Turkiye), continues to face mounting pressure to address the ongoing inflation issue, particularly from a growing number of households who expect inflation to remain high over the next year.
- In the Turkish finance and business sector, analysts are closely monitoring the declining inflation expectations among market participants, while also taking note of the rising household inflation expectations. This contrast suggests that businesses must stay vigilant and adapt as they make financial decisions in the face of fluctuating inflation rates.
