Published on Tuesday, November 3, 2026

Türkiye | Volatile headline, steady core inflation

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Consumer inflation came in at 2.58% m/m in Oct26, exceeding our forecast (2.45%) and consensus (2.4%), lifting annual inflation to 29.8% (vs. 29.7% in Sep26). We maintain our 2026 year-end inflation forecast at 30%, with risks slightly tilted to the upside, and continue to expect the CBRT to pause at its December meeting.

Key points

Key points:
Headline inflation surprised to the upside, mainly driven by food and energy prices. According to our calculations, seasonally adjusted (s.a.) monthly inflation also accelerated to 2.1% m/m (vs. 1.6% m/m prev.), largely reflecting stronger food and energy price pressures.
Core-C inflation (s.a.) edged down to 1.6% m/m (vs. 1.7% m/m prev.), as the moderation in basic goods inflation more than offset the acceleration in services inflation. Its three-month trend also improved to 1.7% m/m (vs. 1.8% m/m prev.) but the overall median and the average of six underlying inflation indicators remained unchanged, continuing to warrant caution.
Ongoing softness in domestic demand supports core disinflation by limiting second-round effects. However, with firms' margins already narrowing, the inflation outlook will increasingly depend on food and energy prices, alongside the restrictive stance of the policy mix. We will closely monitor the messages and the potential revisions in the next inflation report of the CBRT on November 12th.
We maintain our 2026 year-end inflation forecast at 30%, with risks slightly tilted to the upside, partly mitigated by subdued demand conditions. We continue to expect the CBRT to pause at its December 10 MPC meeting, given elevated energy prices and recent pressures on reserves. Nevertheless, should energy price pressures ease and reserve conditions stabilize, a 100bp rate cut, broadly in line with market consensus, cannot be ruled out.
Looking ahead to 2027, persistent supply disruptions, uncertainty surrounding early-year price and wage adjustments, expected fiscal and credit impulses, and still-high inflation expectations lead us to forecast inflation closer to the upper end of the 25–30% range.