While annual inflation in Türkiye fell below 30 percent for the first time since November 2021, experts noted that with the data in question, the Central Bank of the Republic of Turkey (CBRT) created a total interest rate reduction area of 200 basis points until the end of the year.
According to Turkish Statistical Institute (TUIK) data, the Consumer Price Index (CPI) increased by 1.84 percent on a monthly basis and 29.73 percent on an annual basis in September.
Annual inflation was at 27.38 percent in domestic producer prices. Thus, inflation fell below 30 percent on an annual basis for the first time since November 2021.
In terms of main expenditure groups in CPI, the biggest decrease in September compared to the previous month was in food and non-alcoholic beverages with 0.2 percent. During the said period, the highest increase was calculated in education with 14.19 percent.
Looking at the monthly changes of the three main expenditure groups with the highest weight, a 0.2 percent decrease was recorded in food and non-alcoholic beverages, while a 2.79 percent increase was recorded in transportation and a 2.71 percent increase in housing, water, electricity, gas and other fuels.
“CPI INDICATORS INDICATE A DECLINE IN ALL GROUPS, INCLUDING THE SEPTEMBER HEADLINE”
AA Finance analyst and economist Haluk Bürümcekçi, in his evaluation to the AA correspondent, said, “The seasonally adjusted CPI indicators followed by the Central Bank of the Republic of Turkey (CBRT) in terms of the main trend point to a decrease in all groups, including the headline, in September.” he said.
Stating that the bank preferred not to give a clear signal regarding the next meeting due to global uncertainties, Bürümcekçi said:
“In the remaining period of the year, it can be said that the CBRT’s policy rate reduction area is around 200 basis points in order to close the gap between the policy rate and the last annual CPI. In this context, if global developments, inflation outlook and reserve developments do not change significantly until the Monetary Policy Committee meeting to be held on October 22, a 100 basis point reduction will be one of the strongest options on the table at this meeting. While we maintain our year-end CPI forecast as 28-30 percent, the risks over the forecast range will be We think it’s balanced.”
Bürümcekçi predicted that global commodity prices, especially oil, will continue to be decisive in terms of external conditions in the course of inflation in the coming period.
Noting that food inflation has brought down both the unprocessed and processed food groups, Bürümcekçi stated that the course of food prices in 2026 will be one of the important determinants in which direction and to what extent the CBRT may deviate from the year-end inflation target and forecast range.
“FOOD PRICES WERE ONE OF THE MAIN ITEMS SUPPORTING DOWNWARD INFLATION”
Kuveyt Türk Investment Research Director Kutay Gözgör said that higher monthly increases in core inflation indicators compared to headline inflation were noteworthy.
Stating that the price developments in the transportation, housing, education and clothing and shoe groups were decisive in the September inflation data, Gözgör stated that on the basis of expenditure groups, the transportation group made the highest contribution to monthly inflation with 0.49 points.
Gözgör stated that the housing, water, electricity, gas and other fuels group contributed 0.33 points to inflation due to the start of the autumn-winter season, the increase in fuel prices and the increase in energy costs, and made the following evaluations:
“With the start of the new education period, the education group contributed 0.30 points, and the clothing and shoes group, which has been limiting monthly inflation for a long time, contributed 0.26 points. On the other hand, food prices were one of the main items that supported the headline inflation downwards in September. With the effect of the 8.93 percent decrease in fresh fruit prices and the 2.33 percent decrease in unprocessed food prices, the food and non-alcoholic beverages group reduced monthly inflation by 0.05 points. While we evaluated the September inflation being below expectations as positive, core inflation was down by 0.05 points. “We consider the monthly increases in indicators to be above the headline inflation as a development that should be taken into consideration in terms of pricing behavior. Especially the 2.14 percent monthly increase in CPI-C indicates that the rigidity in inflation has not completely disappeared.”
Gözgör noted that developments originating from the Middle East and volatilities in energy prices continue to be the main risk factors for the inflation outlook in the coming period.
However, Gözgör stated that they expect inflation to trend towards a more moderate path in the last months of the year, as one-time and seasonal price increases are left behind and the more moderate course of energy prices reduces cost pressures. “We think that the September inflation, which was below expectations, is supportive for the CBRT to restart the interest rate reduction cycle.” he said.
Gözgör concluded his words as follows:
“In this context, we expect the policy rate to be reduced by 100 basis points to 36 percent at the CBRT Monetary Policy Committee meeting to be held on October 22. We evaluate that there is a total interest rate reduction area of 200 basis points until the end of the year. In this regard, we maintain our 2026 year-end CPI expectation at 28.8 percent and our year-end policy rate expectation at 35 percent.”
“WE ARE PROCEEDING WITH THE RIGHT STEPS TO ENSURE PRICE STABILITY”
Tuncay İnci, Chairman of the Board of Directors of Spectrum Auditing, Consultancy, Certified Financial Consultancy Inc., also pointed out that inflation has fallen below the 30 percent psychological threshold, increasing positive opinions, and said, “The results of the stability-oriented economic policies implemented together with the positive steps taken by the government so far have begun to be seen.” he said.
Drawing attention to the price movements in this month’s developments, especially in the food item, İnci stated that there was a 0.2 percent decline in the food and non-alcoholic beverages group.
İnci emphasized that the decline in this item, which citizens can directly feel, is one of the main factors that revealed the decline in headline inflation by undeniably relieving the inflation basket.
Stating that resistance due to hardening continues in some basic items such as transportation and housing, İnci stated that there is a strong downward trend in the general index.
Pointing out that these developments are a strong signal that increases predictability in the markets, İnci said, “In general, both the relaxation in food prices and this steady downward trend in headline figures have been a clear indication that the right steps are being taken towards the goal of ensuring price stability and that the outputs of the economic program are beginning to be seen.” shared his knowledge.
