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Turkey’s Seasonally Adjusted Inflation Falls Below Expectations, Opening Door for Possible Rate Cuts

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Turkey’s seasonally adjusted inflation slowed more than expected in October, strengthening expectations that the Central Bank (TCMB) could begin cutting interest rates as early as December. The latest data shows easing momentum in core inflation, even as food and services continue to drive price pressures.

Seasonally Adjusted Inflation Comes in Lower Than Forecasts

According to new data from the Turkish Statistical Institute (TÜİK), seasonally adjusted core CPI (TÜFE) rose 1.81% month-on-month in October, significantly below market forecasts.

Breakdown of the special CPI indicators:

Indicator (Seasonally Adjusted) Monthly Change
Headline CPI (General) +1.81%
CPI excl. unprocessed food, energy, alcohol–tobacco, and gold +2.43%
CPI excl. energy, food, alcohol–tobacco, and gold +2.41%

Category-level changes:

Category Monthly Change
Energy +1.28%
Food & non-alcoholic beverages +3.41%
Non-food excluding energy & food +3.15%
Services +1.79%

Forecast comparison:

  • Tacirler Yatırım estimate: 2.1%

  • Gedik Yatırım estimate: 2.2%

  • TÜİK result: 1.81%

Central Bank: “Core Inflation Momentum Is Weakening”

The Central Bank of Turkey (TCMB) highlighted that inflation momentum softened in October:

  • Monthly CPI: +2.55%

  • Annual inflation: 32.87% (a 0.42-point decline)

TCMB notes:

  • Food inflation remains elevated due to crop losses, frost risks, and drought, but the negative trend has slowed.

  • Fresh fruit and vegetable prices helped limit the increase.

  • Service inflation was flat after seasonal adjustments.

  • Clothing and footwear reflected new season effects, pushing core goods higher.

  • Producer inflation slowed; annual PPI rose to 27.00%.

“The underlying trend of monthly inflation weakened compared to the previous month.” — TCMB

Analysis: Lower Core CPI Gives TCMB Space to Begin Rate Cuts

The weaker seasonally adjusted inflation strengthens expectations that the Monetary Policy Committee (PPK) could open the door to its first rate cut in December.

Market view:

  • A majority of PPK members are seen as dovish.

  • The softer core inflation number supports their case.

  • Expected first move: no more than 100 basis points.

Even though inflation will remain over 30% by year-end, PPK may prioritize the slowdown in underlying inflation momentum.

What will shape monetary policy in 2026?

➡ Minimum wage and pension increases

Once wage adjustments reflect in final prices (January–February), TCMB will reassess:

  1. Monitor price pass-through,

  2. Evaluate expectations,

  3. Pause cuts if inflation psychology deteriorates.

What’s Next: Eyes on November 8 Inflation Report

TCMB will reveal its final Inflation Report of the year on November 8.

  • Market does not expect explicit rate cut language in the report.

  • However, during the Q&A session, the committee’s most hawkish member, Dr. Cevdet Akçay, may signal the internal balance of opinions.

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