Turkey July household 12-month inflation expectation 54.5%

Turkey July household 12-month inflation expectation 54.5%

Turkey's household inflation expectations for the next 12 months are at a high 54.5%, according to the latest survey conducted by the Central Bank of the Republic of Türkiye (CBRT) [1]. This figure indicates a significant concern among consumers regarding the rising cost of living.

The survey, released on Monday, July 28, 2025, shows that inflation expectations have remained stable since the previous month. This stability is notable as it reflects the continued uncertainty surrounding the country's economic outlook. The central bank has been actively implementing monetary policies to combat inflation, which has been a persistent challenge for the Turkish economy.

In the context of the current economic climate, the high inflation expectations are a result of several factors. The ongoing geopolitical tensions, global energy prices, and domestic economic policies have all contributed to the current inflationary environment. The central bank's aggressive monetary tightening since mid-2023, combined with favorable energy prices, has helped reduce inflation, but the impact has been gradual and not yet sufficient to significantly lower the expectations.

The CBRT has maintained its year-end mid-point estimate for the consumer price index (CPI) at 24%, with an upper band of 29%. Despite the recent improvements in inflation rates, the central bank continues to emphasize that inflation will remain within this forecast band. The better-than-expected June inflation print renewed expectations that the central bank would return to an interest rate-cutting cycle at the meeting of its Monetary Policy Committee (MPC) this week.

Most economists expect the bank to cut the policy rate this week, with the median forecast being a 250 basis-point cut to 43.50%, according to a Reuters poll. This move would mark the first cut since a surprise 350 basis-point hike in April, which reversed an earlier easing cycle. The expected rate cuts are likely to continue in the months ahead, with the policy rate falling to 36% by the end of 2025.

On the currency front, the year-end dollar/lira forecast was slightly revised upward to 43.72, from 43.57. The 12-month forecast for the exchange rate also rose to 47.70. Meanwhile, GDP growth forecasts for 2025 and 2026 remained unchanged at 2.9% and 3.7%, respectively.

In conclusion, Turkey's household inflation expectations for the next 12 months remain high at 54.5%, reflecting ongoing concerns about the rising cost of living. The central bank's monetary policies and the broader economic environment will play a crucial role in determining the trajectory of inflation in the coming months.

References:
[1] https://www.dailysabah.com/business/economy/turkiye-inflation-expectations-down-ahead-of-key-rate-meeting