Households’ inflation expectations decline in August

ANKARA

The 12-month-ahead annual inflation expectations decreased by 0.4 points to 54.1 percent for households in August compared to the previous month, the Central Bank’s said on Aug. 26.

The proportion of households expecting a fall in inflation in the next 12 months, compared to the previous month, increased by 1.0 points to 27.6 percent, showed the bank’s Sectoral Inflation Expectations survey.

12-month-ahead annual inflation expectations declined by 0.6 points to 22.8 percent for market participants and by 1.3 points to 37.7 percent for the real sector.

“Inflation expectations are improving. This positive trend in expectations is contributing to the disinflation process,” said Finance Minister Mehmet Şimşek, commenting on the Central Bank’s survey.

He noted that the 12-month ahead inflation expectations of the real sector and households have declined by 16 and 19 percentage points, respectively, compared to the same period last year.

“We will continue to implement our program with determination to achieve lasting price stability,” Şimşek wrote on social media platform X.

Households’ 12-month ahead inflation expectations stood at 59.86 percent in May.

Türkiye’s annual inflation rate hit a 44-month low, at 33.5 percent in July, with consumer prices advancing 2.06 percent month-on-month, up from 1.37 percent in June.

Earlier this month, the Central Bank said that it expects annual inflation to decline to 24 percent at the end of this year and 16 percent by the end of 2026.

"We estimate that inflation will be between 25 percent and 29 percent by the end of 2025. Our forecasts for the end of 2026 indicate that inflation will decline to between 13 percent and 19 percent," Central Bank Governor Fatih Karahan said on Aug. 14, speaking at the Briefing on the latest edition of the bank’s Inflation Report.

The bank also set its interim inflation targets for 2026 and 2027 as 16 percent and 9 percent, respectively.

Karahan said that they anticipate inflation to decline to 9 percent in 2027 and then stabilize at 5 percent in the medium term.

"During the disinflation process, we will maintain our tight monetary policy stance to achieve our interim targets," he reiterated.

The bank resumed interest rate cuts in July, reducing the policy rate by 300 basis points to 43 percent.

The bank’s remaining rate-setting meetings for the year are scheduled for Sept. 11, Oct. 23 and Dec. 11.