Turkey’s Inflation Update for January

ANKARA (Reuters) – Turkey’s monthly inflation rate climbed more than expected to 5.03% in January due to a minimum wage hike and several new-year price updates, while annual inflation fell to 42.12%, data showed on Monday.

The monthly rise in the consumer price index (CPI) was above the 4.35% forecast in a Reuters poll and sharply up from 1.03% in December.

Sectoral Price Changes

The biggest monthly sectoral price rise in January was observed in:
– Health, goods, and services
– Education
– Housing

Annually, education, housing, and health contributed to the rise, the Turkish Statistical Institute data showed.

Annual Inflation Trends

Annual inflation has been falling since last May when it exceeded 75%, as tighter monetary and fiscal policies curbed overheating domestic demand.

Central Bank Actions

The central bank launched an easing cycle in December, cutting the policy rate to 45% earlier this month while pledging to maintain sufficiently tight policy to ensure continued disinflation.

While most taxes and fees have been updated in line with the standard inflation coefficient for 2025, the government limited a hike in fuel tax this month to 6% as part of its disinflation efforts.

Government’s Assurance

President Tayyip Erdogan and his government have repeatedly stated that inflation will fall and converge with their targets over time, urging people struggling with high costs of living to show patience.

Monday’s data also showed the domestic producer price index rose 3.06% month-on-month in January for an annual rise of 27.20%.