Bloomberg HT: Consumer Confidence Falls in July as Inflation Gnaws Disposable Income

The Bloomberg HT Consumer Confidence Preliminary Index dropped 8.41% in July compared to the previous month’s final reading, falling to 70.52. This marks a reversal in the upward trend seen over the past six weeks and reflects growing anxiety over economic and political instability.

Consumer Sentiment Weakens Again

The data suggests that consumer perception of current conditions has deteriorated, and expectations for the future have worsened. Notably, the Consumer Expectations Index plunged 14.94% to 68.10, reflecting deepening public skepticism regarding the government’s economic policy trajectory.

Bloomberg HT analysts point to rising political risk perception, uncertainty over interest rate cuts, and unmet wage expectations as key factors behind the slump in confidence.

Consumption Tendency Rises Slightly Despite Inflation

Interestingly, while general sentiment declined, the Consumption Tendency Index—which gauges consumers’ willingness to purchase durables, vehicles, or homes—rose 1.83% to 80.56. Analysts interpret this as a sign that internal demand continues to support economic growth, albeit cautiously and unevenly.

“Despite volatile expectations, consumption behavior remains slightly expansionary,” the report notes.

Broader Economic Struggles Continue

The consumer data comes amid wider economic challenges:

• The federal budget posted a ₺980.5 billion deficit in the first half of 2025.

• Foreign debt of the private sector hit a 66-month high, adding external pressure.

• Meanwhile, yearly inflation in the UK and global commodity markets (e.g., silver) continue to affect sentiment and capital flows.

The Bloomberg HT report also arrives as Turkey’s central bank (TCMB) faces scrutiny over its next policy steps. Morgan Stanley recently forecast a 250 basis point interest rate cut in July, amid slowing demand and expected disinflation through summer.

KOBİs and Credit Challenges

In parallel, the TOBB “Nefes Kredisi” program was relaunched to support small and medium-sized enterprises (KOBİs), aiming to ease credit access with favorable terms. But concerns remain that broader consumer financing conditions have not improved proportionately.