Istanbul Inflation Surges 3.31% in October, Annual Rate Tops 40%

Clothing, food, and communications prices drive sharp increase; economists warn headline CPI could surprise on the upside.

Consumer prices in Turkey’s largest city jumped 3.31% month-on-month in October, bringing the annual inflation rate to 40.84%, according to data released by the Istanbul Chamber of Commerce (İTO) on Thursday.

Wholesale prices rose 1.51% on the month, underscoring persistent cost pressures across key goods categories. The surge was driven mainly by seasonal clothing and footwear price hikes, as well as strong gains in food and communications.

Economists say the data signals that national inflation — due from TurkStat on Monday — could overshoot forecasts, keeping pressure on the central bank to maintain its tight monetary stance through year-end.

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Sharp rise in retail prices led by clothing and food

In October, İTO’s 2023=100 base Istanbul Retail Price Index climbed 3.31%, while the Wholesale Price Index gained 1.51%.

Compared with the same month last year, retail prices rose 40.84%, and wholesale prices 23.78%.

The steepest monthly increase came from the clothing and footwear group (+17.26%), as winter products entered the market. Other major increases were seen in:

• Communications: +5.42%

• Food and non-alcoholic beverages: +4.05%

• Hotels and restaurants: +3.97%

• Alcoholic drinks and tobacco: +2.38%

• Housing: +2.21%

• Household goods: +2.02%

• Entertainment and culture: +1.39%

• Transport: +0.61%

No changes were recorded in education and health spending categories.

İTO said that seasonal factors, new product pricing, and ongoing food inflation all contributed to the surge.

Wholesale prices climb across key sectors

Wholesale inflation also picked up, reflecting higher input and energy costs.
In October, the Wholesale Price Index rose:

• Food: +3.40%

• Fuel and energy: +3.13%

• Metals: +2.53%

• Construction materials: +1.05%

Meanwhile, prices declined 0.81% in chemicals and 0.91% in processed goods, while the textiles group remained flat.

İTO said the data show that food prices are once again gaining momentum, while the energy sector remains volatile but elevated.

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Economists expect national CPI near 2.7% in October

According to AA Finans, a survey of 28 economists yielded an average October CPI forecast of 2.69%, with estimates ranging between 2.0% and 3.0%.
This would imply a slight moderation in annual inflation from 33.29% in September to 33.05%.

A separate Bloomberg HT poll of 19 institutions showed a median expectation of 2.71% monthly and 33.1% annual inflation, with year-end 2025 inflation expectations at 32%, and 2026 forecasts around 23%.

Economists broadly expect the central bank to hold interest rates steady in coming meetings, pending clearer signs of disinflation.

Market outlook: Three possible scenarios

Analysts at Destek Yatırım outlined three potential market scenarios ahead of the official CPI data release:

1. Inflation above expectations:
If the data exceed forecasts, short-term corrections could hit Borsa Istanbul, especially bank and industrial stocks.
Higher inflation would strengthen expectations that interest rates will remain high for longer, pushing bond yields and FX rates upward, while lira-based gold prices may gain.

2. Inflation in line with expectations:
Markets would likely maintain current trends with limited volatility, as uncertainty remains contained.

3. Inflation below expectations:
A softer inflation print could support equities and bonds, leading to limited declines in FX rates and mild pullbacks in gold prices.

Central Bank focus: Disinflation losing momentum

The latest CBRT minutes warned that disinflation has slowed, despite moderation in food prices.
The Bank said “demand conditions are now consistent with disinflation,” but inflation remains sticky across food and services.

Economists believe headline inflation will stay elevated through the first quarter of 2026, keeping monetary policy tight and data-dependent.

Year-end inflation seen around 32%

Both AA and Bloomberg HT surveys show that economists expect year-end inflation near 32%, down from current levels but still far above target.
Analysts forecast a gradual disinflation path supported by high real rates and weaker domestic demand into 2026.

October’s inflation print will be a key input for the CBRT’s final policy decisions of 2025, determining whether further tightening or a prolonged pause lies ahead.

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