Households Expect 54.5% Inflation While Markets Predict 23%

In July 2025, Turkey’s inflation expectations revealed a growing divide between economic actors and ordinary citizens. While financial markets and industry participants revised their forecasts downward, households grew more pessimistic, expecting inflation to soar to 54.5% over the next 12 months.

Market and Industry Expect Lower Inflation, Households Don’t

According to the Turkish Central Bank’s Sectoral Inflation Expectations Report, inflation expectations for the next 12 months declined across financial and industrial sectors. Data compiled from the Market Participants Survey, the Economic Tendency Survey, and the Consumer Tendency Survey highlight this divergence:

• Market participants cut their inflation forecast from 24.6% to 23.4%

• The real sector revised its forecast from 39.8% to 39%

• But households raised their expectations from 53% to 54.5%

Only 1 in 4 Citizens Think Inflation Will Fall

Even more telling is the drop in public optimism. The proportion of citizens who believe inflation will decline in the coming year fell 4.1 points, from 30.7% to 26.6%. This suggests that despite improving macroeconomic signals, public trust in price stability remains shaky.

“The data shows a psychological divergence between institutional forecasting and everyday experience,” say analysts, noting that households may be reacting more to daily price movements than abstract indicators.

Confidence Gap Signals Policy Communication Challenge

This rift points to a critical challenge for economic policy communication. While market-based inflation indicators are showing improvement, household sentiment remains anchored in pessimism, reflecting lingering concerns over food, rent, and utility costs.

Economists warn that expectation management is vital for bringing inflation under control. The public’s rising concern may also reflect previous price shocks, currency fluctuations, and a general distrust in long-term economic stability.

Inflation Expectations at a Glance (12-Month Outlook):

• Markets: ↓ to 23.4%

• Industry: ↓ to 39.0%

• Households: ↑ to 54.5%

• Share of citizens expecting inflation to fall: ↓ to 26.6%