Turkiye Inflation: September CPI Falls Below 30% for First Time Since 2021
After hitting 31.5% annually in August, Turkiye’s inflation eased to 29.7% in September, coming below 30% for the first time since November 2021 helped by lower food price pressures and favourable base effects.
Bottom line up front (BLUF): Turkish Statistical Institute (TUIK) announced September inflation figures on October 5. After hitting 31.5% annually in August, Turkiye’s inflation eased to 29.7% in September, coming below 30% for the first time since November 2021 helped by lower food price pressures and favourable base effects while energy prices and geopolitical uncertainties continued to pose significant risks over the CPI trajectory. Despite risks, we think the Central Bank of Turkiye (CBRT) will likely consider cutting the rate by 100 bps to 36% in the next MPC scheduled for October 22.
Figure 1: CPI, Core Inflation, PPI (YoY, % Change) and Policy Rate (%), September 2024 – September 2026
Source: IslamicMacro
Turkish Statistical Institute (TUIK) announced September inflation figures on October 5. After hitting 31.5% annually in August, Turkiye’s inflation eased to 29.7% in September, faster than market expectations. The CPI fell below 30% for the first time since November 2021 which is good news for the trajectory. Despite this, m/m remained close to 2% and came in at 1.84% in September, showing that the rate of disinflation has not yet reached its desired target yet. Core inflation also remained relatively high, with the core CPI rising 28.7% annually, and 2.1% monthly in September.
According to TUIK’s announcement, education prices recorded the highest annual price increase among the main categories at 48.6 % y/y, followed by health surging by 43.3% and housing by 39.9%. Food and non-alcoholic beverages inflation rose moderately by 27.6% y/y while food prices declined by 0.2% on a monthly basis. Monthly housing and transportation prices surged by 2.7% and 2.8%, respectively.
The September print was better than expected, mainly helped by lower food price pressures and favourable base effects. Treasury and Finance Minister Mehmet Simsek said on October 5 that annual inflation falling below 30% was an important milestone and noted that the disinflation process was becoming more broad-based. Simsek also pointed to the continued easing in food inflation and some moderation in services and rent inflation.
The Central Bank of Turkiye (CBRT) kept its policy rate unchanged at 37% at its September meeting. The Bank said recent inflation data and leading indicators continued to point to a slowdown in underlying inflation, while domestic demand remains relatively weak. At the same time, the CBRT highlighted energy prices and geopolitical developments as important upside risks to inflation.
The September inflation figure is encouraging, but inflation is still above the CBRT's target while housing, transportation and energy prices remain high. In addition, higher oil prices and geopolitical tensions could put renewed pressure on inflation in the coming months. Despite risks, we think the CBRT will likely consider cutting the rate by 100 bps to 36% in the next MPC scheduled for October 22.
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Analyst / Author Declaration: I, Volkan Sezgin, Independent Analyst and Researcher, declare that the views and conclusions expressed in this publication reflect my professional judgment at the time of publication and are presented in good faith. The analysis has been prepared independently and without improper influence or inducement. Where applicable, material conflicts of interest are disclosed. I observe applicable professional and internal compliance standards concerning confidentiality, independence and the responsible use of information.