Turkey’s Inflation Slows Sharply to 30.9% as Debate Over Data Persists

Türkiye İstatistik Kurumu (TÜİK) reported on Jan. 5 that annual consumer inflation eased to 30.9% in December 2025, down from 44.4% a year earlier and marking a fourth consecutive monthly slowdown. The 12‑month average for 2025 stands at 34.9%, a pronounced decline from a 2024 average of 58.5%, and the December rate is the lowest since November 2021.

Sequential figures signal a modest deceleration: the annual rate edged down from 31.07% in November to 30.89% in December. The official read aligns with the central bank’s year-end forecast of roughly 31–33%, a point that underpinned the bank’s recent policy discussion even as it trimmed the policy rate to 38% from 39.5% late in 2025.

The official trend masks sharp differences across spending categories. Housing and utilities remain the most elevated component with year‑on‑year inflation near 49.45% in December, followed by transport at 28.44%. Clothing and footwear slowed to 6.50%, while furnishings and household equipment registered 24.97% and recreation and culture 24.99%. These sectoral patterns suggest that core and service inflation, particularly housing-related items, remain resilient and could sustain price pressures even as headline momentum eases.

Independent measurement groups continue to dispute the official picture. ENAG, a panel of independent economists, reported December year‑on‑year inflation of 56.14% and a month‑on‑month rise of 2.11%, a gap that underscores persistent questions about methodology, sampling and cost-of-living impact. That divergence has direct policy implications: if inflation is closer to ENAG’s estimate, the central bank’s room to ease policy would be more constrained.

Business activity indicators offer a mixed backdrop. S&P Global’s purchasing managers index stood at 50.2 in recent data, a reading historically consistent with roughly 5% annual GDP growth. S&P Global economist David Owen said, “improvements in order books have been a clear factor behind strong business performances over the past few months.” The PMI also showed a pickup in purchasing after nearly a year of contraction, while employment dipped and cost inflation ticked up slightly from November.

Financial markets and forecasters are split on the path ahead. Third‑party models suggest a short‑term fall toward about 25% by the end of the current quarter and a longer‑run convergence to single‑digit inflation around 2027, but those outputs are model dependent and sensitive to wage dynamics, currency moves and monetary settings. Recent policy moves and a 27% increase in the minimum wage in late 2025 will be watched closely for pass-through to services prices and household demand.

Turkey’s inflation trajectory has moved from crisis levels in 2024 to a notable slowdown in 2025, yet the level remains elevated by historical standards; the long run average from 1965 to 2025 is 35.39%, with prior extremes ranging from a peak of 138.71% in 1980 to a trough of -4.01% in 1968. The immediate policy challenge is navigating the credibility gap between official and independent measures while managing economic growth, wage pressures and expectations that will shape inflation in 2026. Upcoming monthly TÜİK readings, central bank communications and independent updates will be crucial for markets and households.