Koç University Survey: Household Inflation Expectations Surge to 69% for Year-End

The latest April 2025 Household Inflation Expectation Survey by Koç University reveals a notable spike in inflation expectations among Turkish households. According to the report, the 12-month forward inflation expectation rose from 66% to 68%, while the year-end expectation climbed from 67% to 69%. The past 12 months’ realized inflation estimate also jumped from 74% to 78%.

Professor Selva Demiralp, lead researcher and economics professor at Koç University, described the shift as evidence of growing uncertainty, stating,

“We’re observing a significant increase in uncertainty this month.”

Rising Internal Divergence in Inflation Expectations

Beyond the averages, Demiralp noted that inflation expectation dispersion is widening. While the standard deviation remained stable, the interquartile range (IQR)—a measure that reflects confusion at the center of the distribution rather than outliers—rose sharply.

“This signals growing confusion among households,” Demiralp explained. “It also reflects how political tension is now creating economic costs.”

The fragmentation in expectations across demographic groups further supports this concern.

• 18–29 age group: 12-month inflation expectation at 68%

• 30–49 age group: 65%

• 50+ group: 70%

Demiralp attributed the younger group’s elevated inflation concerns to their increasing sensitivity to political risk—a sentiment previously more associated with older demographics.

Dollarization Jumps Despite Lira Deposits Gaining Ground

The survey also tracked changing savings preferences, uncovering a significant 13-point rise in foreign currency holdings.

• In March, 43% of households favored foreign exchange assets.

• By April, this climbed to 56%.

Meanwhile, interest in Turkish lira time deposits rose from 29% to 37%, a move Demiralp linked to the Central Bank of Türkiye’s recent interest rate hikes.

“This suggests the rate hike has had a partial effect in curbing dollarization,” she commented, while warning that confidence in monetary policy remains fragile due to the lack of a clear anchor in expectations.

Inflation Expectations Now a Key Threat to Stability

The widening spread in inflation forecasts reflects more than temporary discomfort—it reveals a deepening loss of confidence in policy effectiveness.

“The loss of an anchor in expectations poses a serious risk for monetary policy,” Demiralp warned.

As Türkiye faces persistent inflation and heightened political uncertainty, household perceptions are emerging as a critical early indicator for future economic turbulence.