Turkiye’s Annual Inflation Projected to Rise Above 31% in April
Bottom line: After hitting 30.9% annually in March, we expect Turkiye’s inflation will likely moderately increase over 31% in April as the economy remains under pressure from Iran war, which sparked a surge in energy, transportation and agricultural input costs. Our average inflation forecast for 2026 remains at 28.4% due to fragile pricing behaviour, surging energy costs and stubborn food and services prices. April print will be announced by Turkish Statistical Institute (TUIK) on May 4.
Figure 1: CPI, Core Inflation (YoY, % Change) and Policy Rate (%), January 2015 – March 2026
Source: Continuum Economics
After Turkiye’s inflation stood at 30.9% y/y in March due to higher education and housing prices, we expect inflation will moderately increase to over 31% in April due to upside-tilted inflation risks and surges in energy, transportation and agricultural input costs due to Iran war. (Note: April print will be announced by TUIK on May 4).
We think fragile cease-fire in Iran continues to threaten Turkish inflation outlook. Although the two-week truce between the U.S. and Iran was scheduled to expire on April 21, U.S. President Trump announced an extension of the ceasefire while the truce remains volatile and fragile; and this continues to pose a threat to the Turkish economy particularly given the country’s heavy reliance on energy and fertilizer imports.
Commenting on the impacts of surges in energy prices over the inflation trajectory, the Central Bank of Turkiye (CBRT) said in its written Monetary Policy Committee (MPC) statement on April 23 that elevated energy prices exhibit notable volatility amid geopolitical developments and the resulting uncertainties. "The effects of these developments and domestic energy prices on the inflation outlook through the cost channel," the statement read.
Despite the CBRT maintained its official interim target of 16% in its first Inflation Report of 2026, it is worth mentioning that the regulator notably shifted the forecast range upward to 15%–21% (from the previous 13%–19%). Additionally, the bank raised its 2026 food inflation forecast from 18% to 19%. Despite mentioned targets, we assess that inflation will likely remain above the CBRT’s upper forecast band by year-end. Our average inflation forecast for 2026 stands at 28.4% due to fragile pricing behaviour, surging energy costs and stubborn food and services prices. We also think the CBRT must navigate interest-rate adjustments with caution, adopting a meeting-by-meeting approach throughout 2026 given the CBRT’s commitment to 5% medium-term inflation target which is hard to reach in the next five years under current circumstances.