Turkey's Inflation Rate Forecast

ISTANBUL (Reuters) – Turkey's inflation rate is expected to rise by 1.61% in December from the previous month, reaching 45.2% year-on-year. By the end of 2025, the annual rate is expected to decline to 26.5%, according to a Reuters poll conducted on Friday.

The median estimate from 10 economists indicates that annual inflation will decrease from 47.09% in November to 45.2% in December, which is close to the upper end of the central bank's year-end prediction range. The forecasts range from 44.9% to 45.54%.

Monthly inflation is predicted to slow compared to previous readings due to a decline in food price increases and a small rise in energy costs, with economists estimating it between 1.4% and 1.84%.

Personal attention will also be on services inflation, which has started to show signs of deceleration in recent months, following the announcement of a 30% increase in the minimum wage for 2025, a figure that is significantly lower than what workers requested.

Inflation saw an unexpected surge in November, recording 47.09% annual inflation and 2.24% monthly inflation, driven by rising prices in food, housing, and health sectors.

The central bank has maintained its key interest rate steady at 50% since March but recently cut it by 250 basis points to 47.5% as of Thursday.

In their statement, the central bank emphasized that policy will be set “prudently on a meeting-by-meeting basis with a focus on the inflation outlook” and will respond to any anticipated “significant and persistent deterioration.”

The Reuters poll showed a forecast for annual inflation to drop to 26.5% by year-end, with estimates ranging between 25% and 29%. Conversely, the central bank anticipates inflation falling to 21% in the same timeframe and is expected to reduce rates further next year.

The Turkish Statistical Institute is set to release December’s inflation data at 0700 GMT on Jan 3.