Turkey’s Retail Confidence Slips in November as Expectations Weaken Despite Annual Gain

Turkey’s retail sector sent mixed signals in November 2025, as confidence weakened every month even while remaining slightly stronger than a year earlier. According to the 191st edition of the Retail Confidence Index (TEPE) published by Economic Policy Research Foundation of Turkey (TEPAV), the index declined sharply month-on-month, reflecting deteriorating business conditions, weaker short-term expectations, and elevated stock levels.

The data shows that TEPE fell by 5.8 points compared to October, while still recording a 0.8-point increase year-on-year. Analysts say the monthly decline highlights growing caution among retailers as demand remains fragile and economic uncertainty weighs on outlooks.

Monthly Decline Driven by Weak Business Conditions

The main factors behind November’s drop were negative assessments of business activity over the past three months and a softening of expectations for the next quarter. Retailers also reported that current stock levels are above normal, a signal that sales have not been strong enough to absorb inventory.

Together, these factors pulled the index downward, despite the modest improvement compared with November 2024.

Sales Expectations Ease Compared to October

Expectations for sales in the coming three months weakened further. The balance value for forward-looking sales expectations was calculated at 6.6 points in November.

This marked a 2.6-point decline compared to the previous month, though expectations were still 6.1 points higher than a year earlier. Survey participants essentially indicated that they do not expect significant changes in business activity in the near term.

Retailers who anticipate deterioration cited weak purchasing power and a fragile economic outlook as the primary reasons behind their concerns.

Business Conditions Seen as Worse Than Last Year

Assessments of business performance compared with the same period last year painted a notably pessimistic picture. In November 2025, the balance value for business conditions dropped to -70.8 points, signaling a sharp deterioration.

This figure represents a significant decline both month-on-month and year-on-year. According to the survey, 80.6% of respondents reported a decrease in business activity, while only a small minority indicated any improvement.

The findings suggest that, despite some stabilization in macro indicators, retailers continue to struggle with subdued demand.

Price Increase Expectations Surge

One of the most striking results of the November TEPE survey was the sharp rise in expectations for price increases. Retailers’ inclination to raise sales prices over the next three months strengthened considerably.

In November, 94.9% of respondents said they expect to increase sales prices, one of the highest levels recorded in recent periods. This trend reflects ongoing cost pressures, inflation concerns, and economic uncertainty, all of which are shaping pricing strategies across the retail sector.

Economists warn that this widespread expectation of price hikes could reinforce inflationary dynamics, particularly if weak demand fails to offset rising costs.

Diverging Trends Across Sectors and Regions

Retail confidence did not move uniformly across all segments of the economy. On a sectoral basis, the most significant year-on-year improvement in confidence was observed in electrical household appliances, radio, and television retail, suggesting relatively stronger demand or resilience in durable goods.

From a regional perspective, the Aegean Region stood out, recording the most pronounced annual increase in retail confidence among Turkey’s regions. This divergence points to varying local economic conditions and consumption patterns.

Turkey Outperforms EU Averages Annually

A comparison with Europe offers additional context. Across the European Union, retail confidence improved monthly but declined year-on-year. By contrast, Turkey’s annual change in retail confidence exceeded the averages of both the EU-27 and the Euro Area, highlighting relatively stronger performance over the past year.

However, analysts caution that Turkey’s sharper monthly decline signals mounting short-term risks, even as the longer-term comparison remains favorable.

A Sector Caught Between Cost Pressures and Weak Demand

Overall, the November 2025 TEPE results point to a retail sector caught between rising costs and insufficient demand. While annual confidence levels show modest improvement, the steep monthly drop, pessimistic business assessments, and near-universal expectation of price increases suggest that retailers are operating under increasing strain.

As Turkey moves toward year-end, attention will focus on whether consumer demand can recover enough to ease inventory pressures—or whether price increases will further dampen purchasing power and retail confidence in the months ahead.