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Turkey’s Inflation Expectations Flatten as Economy Seeks a New Equilibrium

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Summary:


Koç University’s November 2025 Household Inflation Expectations Survey, combined with the latest weekly macroeconomic data, suggests that the Turkish economy is entering a phase of fragile but increasingly predictable rebalancing. Inflation expectations have halted their downward trend, savings behavior is shifting, and macro indicators highlight persistent vulnerabilities.

Inflation Expectations Settle Into a Flat Trend

The November survey shows that households’ inflation outlook has stabilized:

  • 12-month inflation expectation: 53%

  • Year-end inflation expectation: 61%

  • Perceived (felt) inflation: 68%

Economists note that the narrowing dispersion in expectations indicates a decline in uncertainty, an essential condition for policy credibility and forward guidance.

Savings Behavior Shifts: Gold Still Leads, But Diversification Rising

Gold remains the most preferred savings instrument at 56%, though its dominance is gradually declining.

Households show rising interest in:

  • FX deposits

  • TL time deposits

  • Equities

Demand for crypto assets remains limited, suggesting heightened risk aversion despite improving sentiment in financial markets.

ANALYSIS: Türkiye Posts October Current Account Surplus as Services Revenues Surge

Socioeconomic Divide in Expectations Widens

The survey highlights notable demographic differences:

  • Higher education levels correlate with greater diversification in investment choices.

  • Inflation expectations among those who trust economic management are 21 points lower than among those who do not.

  • Women and non-savers report significantly higher inflation expectations, reflecting differing economic exposure and perceived vulnerability.

Türkiye’s Disinflation Back on Track After Latest Rate Cut, CBRT Chief Says

Macro Data Signals a Fragile Balance

Key indicators for November reveal a mixed macro picture:

  • Gross reserves: USD 180.6 billion

  • Economic Confidence Index: 99.5

  • Foreign trade deficit: USD 7.6 billion

  • Hunger threshold: TRY 29,828

  • Broadly defined unemployment: 29.6%

Economists describe this constellation as a “fragile balance”, with external deficits and weak labor market conditions acting as key pressure points.

Market Outlook Remains Cautious

Market indicators show stability with pockets of risk:

  • Gold: USD 4,218

  • BIST 100: Flat

  • Brent oil: USD 62.3

  • CDS risk premium: 238

Analysts note that high gold prices and stable CDS levels suggest investors are cautiously optimistic ahead of 2026.

Overall Assessment: Predictability Improving Despite Fragility

The survey concludes that as 2026 approaches, the Turkish economy is moving toward a more predictable yet delicate trajectory.
The tightening of inflation expectations, shifts in household savings preferences, and continued sensitivity in macro indicators will shape the policy agenda and investor sentiment in the months ahead.

Source:  Blackdot Weekly Newsletter

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