Turkish annual consumer price inflation fell more than anticipated to 33.52 percent in July, according to official data released on Monday. This decline continues a downward trend, even amidst significant increases in prices within the housing and education sectors.
On a month-on-month basis, inflation registered at 2.06 percent, as reported by the Turkish Statistical Institute. In June, the CPI inflation stood at 1.37 percent monthly and 35.05 percent annually.
A mid-year increase in fuel and tobacco prices, along with a rise in natural gas costs, was anticipated to contribute to monthly inflation. Transport prices experienced a month-on-month increase of 2.89 percent, while prices for alcoholic beverages and tobacco rose by 5.69 percent. Additionally, housing prices increased by 5.78 percent.
The domestic producer price index saw a month-on-month rise of 1.73 percent in July, leading to an annual increase of 24.19 percent, the data indicated.
Inflation is projected to decrease to 29.75 percent by the end of this year, according to the poll median, which is higher than the central bank‘s forecast of 24 percent.
Finance Minister Mehmet Simsek stated that the disinflation aligns with targets and that year-end inflation will remain within the central bank’s anticipated range. “We will continue to resolutely implement our program to achieve lasting price stability, our primary priority,” Simsek also noted in a post on X.
Read more: Türkiye’s central bank surprises markets with key interest rate cut to 43 percent
Sustained easing of inflation
The Turkish Statistical Institute (TurkStat) indicated that July’s inflation rate is the lowest since November 2021, when inflation stood at 21.31 percent. Despite the overall easing, annual inflation remains highest in the education sector at 75.5 percent, followed by housing at 62.01 percent, and health at 37.49 percent. Lower annual inflation rates were recorded in clothing and footwear at 10.67 percent, communications at 19.62 percent, and transport at 26.57 percent. Food and non-alcoholic beverages experienced a 27.95 percent annual increase, contributing significantly to the overall CPI rise.
The central bank, which lowered its benchmark interest rate by 300 basis points to 43 percent in July, noted that this easing cycle began despite inflation remaining elevated, reflecting a broader policy shift after previous tightening measures. Core inflation, which excludes volatile food and energy prices, also declined to 34.7 percent in July from 35.64 percent in June.
According to Trading Economics, these figures mark the fourteenth consecutive month of a slowing inflation trend, underscoring sustained efforts to moderate price rises across major expenditure groups. The domestic producer price index’s annual increase of 24.19 percent signals continued pressure on input costs, which could eventually influence consumer prices if trends reverse.
