Turkey’s December Inflation Comes in Below Expectations

Turkey’s inflation trajectory showed a modest easing at the end of the year as the Turkish Statistical Institute (TÜİK) released its December inflation data, revealing figures that came in slightly below market expectations. According to the official data, consumer inflation increased by 0.89% on a monthly basis, while annual inflation stood at 30.89%, undershooting forecasts that had pointed to a stronger rise.

Economists surveyed by AA Finance had anticipated a monthly increase of 0.96% and an annual inflation rate of around 31%. The softer-than-expected outcome has drawn attention, particularly as inflation remains one of the most critical indicators shaping economic policy, household purchasing power, and wage adjustments in Turkey.

December CPI Data Signals Slower Momentum

TÜİK’s figures show that the Consumer Price Index (CPI, 2003=100) rose 0.89% compared to November 2025. On an annual basis, prices increased 30.89% compared to December 2024, while the 12-month average inflation rate reached 34.88%. These data points confirm a gradual deceleration compared to earlier periods, although price pressures remain elevated across key spending categories.

The release also finalized salary and pension adjustments tied to inflation. Under the current framework, private-sector retirees will receive a 12.18% increase, while public employees and public-sector retirees are set to receive an 18.60% raise. These adjustments are directly linked to inflation outcomes and are closely followed by millions of households.

Food, Transport, and Housing Drive Annual Inflation

Despite the headline figure coming in lower than expected, annual price increases in essential spending categories remained pronounced. TÜİK data indicate that the three main expenditure groups with the highest weight in the CPI—food and non-alcoholic beverages, transportation, and housing—continued to exert intense upward pressure on inflation.

Every year, food and non-alcoholic beverage prices rose by 28.31%, reflecting ongoing cost pressures across agricultural production, logistics, and retail. Transportation prices increased by 28.44%, while housing costs surged by a striking 49.45%, making housing the fastest-rising major category.

These increases contributed significantly to overall inflation. Food prices accounted for 7.07 percentage points, transportation contributed 4.36 points, and housing alone added 7.52 points to the annual CPI. The data underscore how housing costs, including rents and utilities, continue to weigh heavily on household budgets.

Monthly Trends Show Mixed Price Movements

When examined monthly, inflation dynamics were more nuanced. Food and non-alcoholic beverages recorded a 1.99% increase in December, reinforcing their role as a key driver of short-term price movements. Seasonal effects, supply constraints, and input costs all played a role in this uptick.

In contrast, transportation prices declined by 1.03% month-on-month, offering temporary relief and partially offsetting gains in other categories. This decline may be linked to movements in fuel prices and short-term adjustments in transport-related costs. Meanwhile, housing expenses rose by 1.39%, reflecting persistent structural pressures in the housing market.

In terms of contributions to monthly CPI, food added 0.48 percentage points, transportation subtracted 0.16 points, and housing contributed 0.24 points. These figures illustrate how opposing movements across categories can moderate the overall inflation outcome, even when underlying pressures remain.

Core Inflation Continues to Edge Higher

Beyond headline inflation, core inflation indicators remain a focal point for policymakers and analysts. TÜİK’s special CPI indicator (B)—which excludes unprocessed food, energy, alcoholic beverages, tobacco, and gold—showed continued upward movement.

In December 2025, core inflation increased 0.78% every month. On an annual basis, the indicator climbed 31.66%, while the 12-month average rose to 34.76%. These figures suggest that underlying inflationary pressures remain sticky, even as headline inflation shows signs of moderation.

Core inflation is often viewed as a more reliable gauge of persistent price trends, as it filters out volatile components. The continued rise in this indicator signals that demand-side and cost-based pressures are still embedded in the economy.

Inflation Comes in Below Market Expectations

The December outcome ultimately landed below consensus forecasts, providing a cautiously optimistic signal for markets and policymakers. According to the AA Finance Inflation Expectations Survey, economists had projected monthly CPI growth of 0.96% and annual inflation of approximately 31%. The actual figures falling short of these estimates suggest a slightly faster cooling than anticipated.

However, analysts caution that a single month’s data does not mark the end of inflation risks. High housing costs, persistent increases in food prices, and elevated core inflation continue to pose challenges to economic stability and real income growth.

As Turkey moves into the new year, inflation trends will remain central to monetary policy decisions, wage negotiations, and broader economic planning. While December’s data point to a marginal easing, the path toward sustained price stability is still unfolding.