Turkey’s Inflation Expectations Show Sharp Divide Among Sectors

The Central Bank of the Republic of Türkiye (CBRT) has released its “Sectoral Inflation Expectations” report for September 2025, showing a notable divergence in inflation outlooks across different groups. While some sectors anticipate easing price pressures, others brace for persistent inflation over the coming year.

Households Expect Inflation to Stay High

According to the CBRT report, household inflation expectations rose significantly compared to the previous month. The average household now anticipates an annual inflation rate of 54.39% for the next 12 months — an increase of 1.40 percentage points. This sharp rise indicates continued concern among consumers about the cost of living, driven by sustained price increases in essentials such as food, energy, and housing.

Market Participants Turn More Pessimistic

Market participants, including financial analysts and institutional investors, also revised their expectations upward. Their 12-month inflation forecast climbed by 1.01 percentage points to 23.26%, suggesting that the financial sector expects monetary tightening to proceed slowly or prove insufficient to bring prices down to target levels.

Real Sector Sees Mild Improvement

In contrast, the real sector’s expectations — which reflect the views of manufacturers and service providers — fell by 0.50 points to 36.30%. This drop signals cautious optimism among businesses that inflationary pressures may ease slightly in 2026, possibly due to stabilization in input costs or improved supply chain dynamics.

A Reversal from August’s Downtrend

This data marks a turnaround from August, when sectoral inflation expectations declined across all groups. Back then, household expectations had fallen by 1.08 points to 52.99%, while the share of households expecting inflation to decrease over the next year dropped by 0.85 points to 26.50%. The new report shows that optimism faded quickly in September, particularly among consumers and financial professionals.

A Reflection of Economic Uncertainty

Experts note that these diverging expectations highlight the uncertainty surrounding Türkiye’s disinflation process. The CBRT’s recent interest rate hikes have not yet anchored public perception, and inflation remains one of the country’s most pressing economic challenges. The gap between household and market expectations — exceeding 30 percentage points — underscores how differently various segments experience and anticipate price movements.

Looking Ahead

The report suggests that while some sectors foresee gradual normalization, others expect inflation to remain stubbornly high through much of 2026. Policymakers face the delicate task of rebuilding confidence while maintaining growth momentum. As one economist summarized, “Perception, not just policy, will determine how quickly inflation expectations fall.”