Inflation Slightly Edged Down in October: But MoM Stood High at 2.5%

Figure 1: CPI, Core Inflation (YoY, % Change) and Policy Rate (%), January 2015 – October 2025

Source: Continuum Economics

Turkish Statistical Institute (TUIK) announced Turkiye October inflation figures on November 3. After Turkiye’s annual inflation saw its first increase since May 2024 in September edging up to 33.3% y/y from 32.9% y/y in August, inflation moderately softened to around 32.9% in October marking a 47-month low. Monthly inflation reaching 2.5% in October suggested that the pace of the decline in inflation will be slower-than-expected due to sticky food and services prices. We think upside-tilted inflation risks, negative effects linked to frost and drought in food prices, geopolitical tensions and volatile energy prices continued limiting the downward trend during the ongoing disinflationary process.

According to TUIK’s announcement, education prices recorded the highest annual increase with 65.6% YoY followed by housing prices were up by 51.0%. Annual food and non-alcoholic beverages prices also edged up by 34.9%. Prices rose at a slower pace across a number of categories, such as footwear and clothing, which came in at 8.0% YoY in October. 

Core inflation surged by 2.4% MoM, bringing the annual rate to 32.0%. TUIK data showed that PPI rose 1.6% m/m in October for an annual rise of 27.0%.

Commenting on the inflation print, Treasury and Finance Minister Mehmet Simsek said on November 3 that “Despite temporary fluctuations can occur during the disinflation process a slowdown has been observed recently, and the overall picture remains unchanged as we expect disinflation to continue.”

It is worth noting that despite Central Bank of Turkiye (CBRT) announced in its third inflation report that the regulator had set interim targets of 24% for end-2025 and 16% for end-2026; Simsek recently underscored that the 2025 projection is hard to reach amid persistent economic pressures, drought, and geopolitical tensions.

According to the Market Participants Survey published by the CBRT in October, participants' year-end consumer inflation (CPI) expectations have recently increased from 29.9% to 31.8%. The 12-month ahead consumer inflation expectation surged from 22.3% to 23.3% in this period. (Figure 2)

Figure 2: Inflation Expectations (%), October 2025 – October 2027

Source: CBRT Survey (October 2025)

We expect moderate slowdown in inflation to continue, but with a slower pace in Q4 as the extent of the decline will be determined by energy prices, food and services inflation, global developments, and TRY volatility. Our average inflation forecasts stand at 34.5% and 22.2% for 2025 and 2026, respectively considering inflation expectations and pricing behavior remain fragile.

We continue to envisage it will be (very) difficult to grind sticky inflation from 30%s to 10%s rapidly, taking into account that inflation becomes stickier requiring high interest to remain for some time. We think the road to bringing inflation back down to single-digit levels will be very bumpy, and the inflation getting there before 2027 remains (very) unlikely, despite CBRT expects the opposite.