Inflation Trends: Turkish Service Costs Hit 47-Month Low

Fresh data from the Turkish Statistical Institute (TÜİK) reveals that monthly inflation rose by 2.96% in February, bringing the annual inflation rate to 31.53%. While the figures slightly exceeded economist expectations of 2.87%, the underlying data suggests a shift in economic momentum. Treasury and Finance Minister Mehmet Şimşek highlighted a critical turning point, noting that service inflation has dipped below 40%, marking its lowest level in nearly four years.

Food Prices Spike Amid Structural Cooling

Despite the overall downward trend in core metrics, the kitchen remains a primary source of pressure for households. Food and non-alcoholic beverages saw a sharp monthly increase of 6.89%, contributing significantly to the annual food inflation rate of 36.44%. Minister Şimşek characterized these hikes as “temporary,” attributing them to seasonal weather conditions and predicting a price correction in the coming months as climate factors stabilize.

Other key expenditure groups reported steady increases:

• Housing and Utilities: Up 42.33% annually (the highest increase among major groups).

• Transportation: Rose 28.86% year-on-year.

• Core Inflation (Excluding Energy/Food): Stood at a more modest 29.91% annually.

Policy Coordination and the Road to Disinflation

The government remains committed to its disinflation strategy, emphasizing the coordinated use of all monetary and fiscal policy tools. While global oil price volatility—driven by geopolitical tensions—poses a risk to energy costs, the ministry is actively working to mitigate these external shocks.

“Service inflation, which typically shows high inertia, has fallen below 40% for the first time in 47 months. This outlook indicates that the downward trend in inflation is continuing,” stated Minister Şimşek.

The focus now shifts to the March rental price cap, which has been set based on the twelve-month average of the Consumer Price Index (TÜFE), providing a benchmark for the real estate sector as the “cooling” phase of the economic program enters its next chapter.