Turkish Inflation Eases to 30.9%, Below Expectations

Turkish Year-End Inflation Slows More Than Expected to 30.9%

Turkey’s annual inflation eased slightly more than expected at the end of 2025, official data showed on Monday, offering a glimmer of respite amid persistent price pressures in key sectors.

Key Inflation Data

According to the Turkish Statistical Institute (TurkStat), the consumer price index (CPI) slowed to 30.89% in December, down from 31.07% in November. Both the annual and monthly figures came in below market expectations.

• Annual CPI: 30.89% (Dec) vs. 31.07% (Nov).
• Monthly CPI Increase: 0.89% in December.

On a monthly basis, inflation rose by 0.89%, compared with forecasts of around 0.98%. A Reuters poll had predicted annual inflation of 31%, while a survey conducted by Anadolu Agency (AA) also expected inflation to settle near that level.

"The moderation in inflation reflects a gradual cooling in price pressures, though elevated costs in key sectors such as education and housing continue to weigh on households and businesses."

Price Increases by Sector

Education and housing continued to lead annual price increases, underscoring the ongoing burden on family budgets and operational costs for businesses.

• Education prices rose by 66.27% year-on-year.
• Housing costs increased by 49.45%, according to TurkStat data.

Producer Price Index (PPI)

The data also showed that the domestic producer price index (PPI) increased by 0.75% month-on-month in December, resulting in an annual rise of 27.67%.

Analyst Note: The PPI, which measures inflation at the factory gate, is often seen as a leading indicator for future consumer price trends. The annual PPI rate of 27.67% suggests that upstream cost pressures, while still significant, are somewhat cooler than consumer inflation.

Outlook and Implications

The better-than-expected December figures may provide some policy flexibility. However, the extreme inflation in critical areas like education and housing presents an ongoing challenge.

• Warning: Inflation remains severely elevated, far above most central bank targets, which are typically around 2%.
• Technical Context: The CPI calculation follows a standardized COICOP (Classification of Individual Consumption by Purpose) methodology.

While the marginal deceleration is a positive development, the path towards disinflation is expected to be long and uneven, with sector-specific pressures remaining a primary concern for economic stability in the coming months.