Turkey’s October Inflation Seen at 2.83%, Year-End Forecast Rises to 32%

Summary:

Turkey’s inflation is expected to rise 2.83% month-on-month in October, driven by higher clothing and food prices, while economists raised their year-end forecast to 32%, according to a Reuters poll. The data points to persistent price pressures despite the central bank’s slower pace of rate cuts and lingering political and agricultural risks.

Inflation Pressure Eases Slightly but Remains High

A Reuters survey of ten economists showed median monthly inflation of 2.83% in October, down from 3.23% in September. Forecasts ranged between 2.7% and 2.9%.
On an annual basis, inflation is expected to remain largely unchanged at around 33%, compared to 33.29% in September.

Economists cited seasonal increases in clothing, unprocessed food prices, and continued strength in automotive, energy, and services inflation as the main drivers behind this month’s rise.

Year-End Inflation Expectations Revised Upward

The median estimate for year-end inflation climbed to 32%, up from 30% in the previous Reuters poll.
That’s well above the central bank’s 24% official target and its forecast range of 25–29%.

Economists noted that structural price pressures remain entrenched, with domestic demand still strong and cost pass-through effects continuing to weigh on consumer prices.

Central Bank Slows Easing Cycle

Earlier in October, the Central Bank of the Republic of Turkey (CBRT) reduced its policy rate by 100 basis points to 39.5%, marking a slower pace of easing.
The bank cited a “slowdown in the disinflation process” and said it would maintain a tight policy stance amid rising food and energy costs.

In its latest statement, the CBRT warned that risks stemming from food price developments had become “more pronounced”, signaling caution against further aggressive cuts.

Political and Agricultural Risks Add to Uncertainty

Market volatility has been heightened by political developments, including the jailing of Istanbul Mayor Ekrem İmamoğlu, President Erdoğan’s main rival, earlier this year on corruption charges he denies.
The lira hit a record low against the U.S. dollar in March, deepening concerns over policy credibility.

Meanwhile, frost damage and drought have also disrupted agricultural supply chains, slowing the government’s planned disinflation path.

Outlook: Gradual Disinflation Expected

Analysts expect a gradual decline in inflation toward year-end, though monthly increases are likely to remain elevated.
Service-sector stickiness, high food inflation, and persistent cost pressures could keep disinflation slower than policymakers hope.