Published on Thursday, September 3, 2026

Türkiye | No surprises, but risks remain

Summary

Consumer price inflation came in at 1.84 % m/m in Aug26, slightly below our expectation and the consensus (1.95% m/m), lowering annual inflation to 31.5%. We maintain our year-end inflation forecast at 30% keeping in mind the volatility in energy prices, uncertainties in supply chains, and unanchored inflation expectations.

Key points

Key points:
Monthly consumer inflation edged up to 1.84% m/m (vs. prev. 1.78%), driven by energy and alcohol & tobacco prices. According to our calculations, seasonally adjusted (s.a.) monthly inflation, in parallel, accelerated to 2.4% (vs. prev. 2.2%) due to the same factors, leading to a moderate deterioration in its 3-month trend .
Core-C inflation weakened to 1.9% m/m, as the moderation in basic goods inflation continued in Aug26 despite the sticky services. While weaker domestic demand conditions support disinflation in basic goods, services inflation remains solid reflecting pressure from time-dependent price increases.
Median inflation and the average of six underlying inflation indicators slightly deteriorated to 1.7% m/m and 1.8% m/m, respectively; however, their three-month averages still eased to 1.6% and 1.9%. However, still unanchored inflation expectations, sticky services inflation, and volatile food and energy prices continue to call for caution.
Time-dependent price adjustments will be a key driver of the September inflation; however, regulations reducing backward-indexation, together with softer demand conditions, might limit the magnitude of these adjustments. If food prices remain benign and energy prices stay broadly stable, monthly inflation could come in at around 2.0% m/m. Combined with favorable base effects, this would bring annual CPI close to 30% y/y in September.
Assuming no further escalation in geopolitical tensions and the maintenance of a prudent policy mix in 2H26, we maintain our 30% year-end inflation forecast. Following the CBRT’s faster than expected normalization in funding and today’s print, we now expect a 100bp policy-rate cut in October (vs. December), bringing the rate to 36%, where we still expect a hold later till year-end.