Inflation, the lira and the Turkish economy
Official inflation fell for a second month in July, to 31.75 percent, but it is still above the central bank's own forecast for the end of 2026, the policy rate has not moved since January, and the net minimum wage has been frozen all year while prices rose almost 20 percent.
Türkiye has run a disinflation programme under treasury and finance minister Mehmet Şimşek. Its instruments are a high policy rate, tighter budgets and the unwinding of schemes that had insured savers against a falling lira. The central bank, the CBRT, publishes a year-end interim target for each year on the way to a medium-term target of 5 percent. In Inflation Report 2026-II, on 14 May 2026, it moved those interim targets to 24 percent for 2026, 15 for 2027 and 9 for 2028.
The July reading from the statistics office TÜİK was 31.75 percent over twelve months and 1.78 percent over the month, a second consecutive annual fall. It remains above the bank's own forecast of 26 percent for the end of 2026, with five months left to run. Core inflation on the B index was 30.98 percent. In March 2026 the CBRT had to send the government the open letter its founding law requires when inflation misses the target band, as it did in 2025.
The policy rate is 37 percent. The CBRT cut it to that level on 23 January 2026 and has left it there at four meetings since, most recently on 23 July. It said then that energy prices had begun trending up again amid geopolitical uncertainty, and that the tight stance would be maintained until price stability is achieved. The run of cuts that had brought the rate down since July 2025 has been paused for half a year.
The central bank names the exchange rate as one channel through which its tight stance works, alongside demand and expectations. Over the twelve months to 6 August the lira went from 40.5932 to 47.5055 against the dollar, losing about a seventh of its value, while consumer prices rose 31.75 percent. July exports were 25.6 billion dollars, up 2.9 percent, which trade minister Ömer Bolat called a record for the month. Imports rose faster, by 5.2 percent. Tourism income fell 2.6 percent in the second quarter.
Inside the country, the minimum wage has not moved. It was set at 28,075 lira net in January, with no mid-year rise, while consumer prices rose 19.86 percent over the first seven months. Food was up 37.53 percent over twelve months and housing 40.32 percent, both faster than the headline rate. TÜRK-İŞ prices a family's minimum monthly food bill at 36,940 lira, above the wage itself. Whether the bank resumes cutting turns largely on energy prices it does not set, and its 2026 target has already been moved once.
”those who spend the greater part of their income on these two groups end up feeling a higher inflation than the official figures, and their purchasing power is directly damaged”
The numbers
What the comparison shows
Where they agree
Nobody disputes that the official rate is far below the 61.78 percent TÜİK recorded for July 2024, that the fall has slowed sharply since, to 1.77 points over the year to July 2026, or that the tight stance is meant to stay in place. The government and the central bank both name energy prices and the regional war as the main threat to the path.
Where they split
Two things are contested. First, how much inflation there actually is: for July, TÜİK reports 31.75 percent over twelve months and ENAG reports 50.49, a gap of close to nineteen points, and DW Türkçe notes that the two use different data sets and different methods. Second, who should carry the adjustment: ministers point to record exports and a contained external balance, while unions point to a minimum wage that no longer covers a family's food bill.
What nobody is saying
Where the minimum wage does reach official commentary, it arrives as a subsidy to employers. Şimşek lists a monthly 1,270 lira minimum wage subsidy per employee among the measures cushioning the tourism industry. None of the statements gathered here treats the frozen wage level itself, 28,075 lira net since January, as one of the things making the disinflation work. That connection is drawn by the union confederation and in the press, not by the people running the programme.
Who says what
Reads the July figure as proof that the disinflation is holding under war conditions, notes that the annual rate fell 0.4 points in the month and that rigidity in services inflation is easing, and says the government is not compromising on fiscal discipline or on permanent price stability.
”Despite challenging global and geopolitical conditions, disinflation continues”Despite challenging global and geopolitical conditions, disinflation continues
Presents the July export figure as a record set in spite of the war, and points to annualised goods and services exports above 401 billion dollars.
”Yüzde 2,9, yaklaşık yüzde 3'lük bir artış bu. Tarihteki en yüksek temmuz ihracatı olarak rekor oldu.”This is 2.9 percent, an increase of roughly 3 percent. It is a record, the highest July export figure in history.
Concedes that inflation passed outside the uncertainty band around the 2025 target, and blames rigid price setting, expectations that never aligned with the targets and seasonal supply shocks rather than the stance of policy. Says the stance will be tightened again if the inflation outlook deteriorates significantly.
Argues that the disinflation has not reached low-income households: its July basket puts a family's minimum monthly food bill at 36,940 lira, above the net minimum wage, and its own kitchen inflation rose 39.85 percent over twelve months.
”DÖRT KİŞİLİK AİLENİN AYLIK GIDA HARCAMASI TUTARI (AÇLIK SINIRI) 36.940 TL.”The monthly food spending of a family of four, the hunger line, is 36,940 lira.
Puts July inflation at 3.07 percent over the month and 50.49 percent over twelve months, close to nineteen points above the official annual figure for the same month. Its own site was unreachable at the time of writing, so the figures here are those DW Türkçe reports it as having published.
Accepts the official figure but says the detail behind it shows food and health costs still climbing, so households that spend most of their income on those two groups experience more inflation than the index reports. Warns that an early rate cut, encouraged by cheaper oil and a rising stock market, could unsettle expectations again, because the cost pressure is coming from supply and not only from demand.
”gelirlerinin büyük bölümünü bu iki gruba harcayanlar resmi rakamlardan daha yüksek bir enflasyon hissetmiş oluyor ve alım gücü doğrudan zedeleniyor”those who spend the greater part of their income on these two groups end up feeling a higher inflation than the official figures, and their purchasing power is directly damaged
Says Türkiye kept its stability in tourism despite the war, and treats the second quarter as the hardest of the year rather than a change of trend.
”We believe we have left the most challenging quarter of this year behind us”We believe we have left the most challenging quarter of this year behind us
Our coverage
- Ankara wants to turn Ceyhan into the Mediterranean's oil trading hubFriday, 7 August 2026
- Türkiye's annual inflation eases to 31.75 percent in July, with housing costs up more than 40 percentWednesday, 5 August 2026
- Turkish Airlines sets all-time daily passenger and flight recordsTuesday, 4 August 2026
- Türkiye's exports climb to an all-time July high of 25.6 billion dollarsTuesday, 4 August 2026
- Tourism revenue fell 2.6 percent in the second quarter, but Şimşek says services exports held upFriday, 31 July 2026