Şimşek Says Inflation Expectations Are Coming Down

Treasury and Finance Minister Mehmet Şimşek has said that inflation expectations across households, the real sector, and market participants have declined significantly compared to the same period last year, signaling continued progress in Turkey’s disinflation process.

In a statement posted on his official social media account, Şimşek emphasized that the downward trend in expectations persists despite short-term inflationary pressures. According to the minister, 12-month-ahead inflation expectations fell by 6.7 percentage points among households, 10.9 points in the real sector, and 3.2 points among market participants on an annual basis.

“The decline in inflation expectations continues,” Şimşek said, underlining that the improvement is broad-based and not limited to a single segment of the economy.

Households Still Cautious, but Trend Is Global

Şimşek acknowledged that household inflation expectations remain higher than actual inflation outcomes, but stressed that this is not unique to Turkey. He noted that in many countries, households tend to anticipate higher inflation than what ultimately materializes, reflecting behavioral factors rather than purely economic indicators.

This gap, he implied, does not undermine the broader disinflation narrative, particularly as expectations are now moving lower year-on-year.

Market Outlook Improves Despite Target Gap

Turning to financial markets, Şimşek said the market’s year-end inflation expectation of 23.2% remains above the government’s official target but represents a clear improvement compared to current inflation levels.

This decline, he argued, shows that confidence in the policy framework is strengthening and that market actors increasingly expect tighter financial conditions and policy discipline to deliver results over time.

January Inflation Seen as Temporary

Şimşek also addressed concerns over January inflation, noting that a monthly increase is expected due to seasonal and one-off factors. However, he stressed that this does not alter the broader trajectory.

He said the government anticipates continued disinflationary progress throughout the year, which should further improve expectations and help ease rigid pricing behavior across the economy. As expectations normalize, he added, inflation dynamics are expected to weaken more decisively.

Commitment to Disinflation Strategy

Reaffirming the government’s policy stance, Şimşek said Turkey will continue implementing disinflation-focused policies supported by structural reforms. He emphasized that consistency and determination remain central to reducing inflation sustainably.

“We will continue to implement our disinflation-focused policies, supported by structural steps, with determination,” Şimşek said, signaling no deviation from the current economic program.