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Geopolitics · Europe · Sweden · Türkiye · the economy
Background

Inflation, the lira and the Turkish economy

Official inflation fell below 30 percent in September, the slowest reading in almost five years, and that was the fourth monthly fall in the annual rate in a row. On 22 October the central bank cut the policy rate to 36 percent, its first move since January, while keeping the threat of tightening again. The net minimum wage has been frozen since January, TÜRK-İŞ puts a family's monthly food bill at 37,800.92 lira, and beside the programme 131 investment funds are being wound up.

Türkiye's official inflation fell to 29.73 percent in September, the slowest since November 2021 and the fourth monthly fall in a row. On 22 October the central bank cut its policy rate by 100 basis points to 36 percent, its first move since January. A family's food basket in Ankara cost 37,800.92 lira that month, against a net minimum wage of 28,075 lira that has not risen since January.
Inflation, the lira and the Turkish economy

Türkiye is running a disinflation programme under treasury and finance minister Mehmet Şimşek. Its instruments are a high policy rate, tighter budgets and an incomes policy; the minimum wage has not risen since January. The central bank, the CBRT, set interim targets in May of 24 percent inflation for this year, 15 for 2027 and 9 for 2028, with a medium-term target of 5 percent. Presenting the 2027 budget on 16 October, vice president Cevdet Yılmaz said fiscal discipline and incomes policy would keep supporting the bank.

TÜİK, the statistics office, put September inflation at 29.73 percent over twelve months and 1.84 percent over the month, against a market expectation of 30.3 percent. That is the fourth consecutive monthly fall in the annual rate, which stood at 32.11 percent in June, and the slowest reading since November 2021. Housing rose 39.99 percent over the year and transport 35.10 percent, both faster than the overall rate. Food and non-alcoholic drinks rose more slowly, 27.62 percent. Of the 174 expenditure subclasses TÜİK tracks, prices rose in 133.

On 22 October the bank cut the policy rate by 100 basis points to 36 percent, its first move since January. It had held at 37 percent for five meetings, the last on 10 September. The committee's language did not soften with the rate. The committee said it remains highly attentive to upside risks on inflation, and that in case of a significant and persistent deterioration in the inflation outlook the policy stance will be tightened.

The minimum wage has not moved: 28,075 lira net since January, and no mid-year rise was granted. TÜRK-İŞ works out what a family's food basket in Ankara costs, and put it at 37,800.92 lira in September, 35.14 percent up on a year earlier. The union puts a single worker's cost of living at 48,884.82 lira. Consumer confidence fell back in October, to 84.8 from 91.9 in September, which had been its highest since July 2018. Both readings are below 100, the level the index counts as neutral.

The cut came in the middle of a market rout. The Capital Markets Board ordered 131 investment funds into liquidation in September, with assets put at about 936.3 billion lira and more than 455,000 investors affected. Parliament passed a repayment law on 22 October. The bank's net international reserves fell 10.7 billion dollars over the five weeks of the turmoil, to 51.5 billion on 16 October. Governor Fatih Karahan says the downturn could weaken the wealth effect that has been supporting demand and adding to price pressure.

502024-0347.52024-12452025-0142.52025-03462025-04432025-0740.52025-0939.52025-10382025-12372026-01362026-10
CBRT policy rate, the one-week repo auction rate · percent · Source: TCMB
The CBRT publishes only the dates on which the rate changed, so the rate is unchanged between the points shown. The step up in April 2025 is a real increase, not a gap in the data. The last change took effect on 23 October 2026, the day after the committee cut to 36 percent, and the series is complete to that date.
”Despite challenging global and geopolitical conditions, disinflation continues”
Mehmet ŞimşekTürkiye's treasury and finance minister, who runs the disinflation programme

The numbers

Consumer price inflation, September 2026
29.73%
29.73 percent over twelve months and 1.84 percent over the month, down from 31.51 percent in August and 31.75 percent in July
TCMB
Core inflation and its breadth, September 2026
The B index, which excludes unprocessed food, energy, alcoholic drinks, tobacco and gold, rose 29 percent over twelve months and 2.01 percent over the month. Of the 174 expenditure subclasses TÜİK tracks, prices rose in 133, fell in 35 and were unchanged in 6
Anadolu Agency
ENAG's rival index, September 2026
ENAG, a group of independent academics who publish their own consumer price index, put September inflation at 2.10 percent over the month and 46.61 percent over twelve months, down from 2.24 and 49.03 percent in August. ENAG's own site did not answer when this page was checked on 30 October 2026, so the figures are the ones hisse.net reports it published.
hisse.net
The central bank's own inflation path
Inflation Report 2026-II set the year-end interim targets at 24 percent for 2026, 15 for 2027 and 9 for 2028, and forecast 26 percent at the end of 2026 against a medium-term target of 5 percent
TCMB
The September hold, and the risk the bank named
On 10 September 2026 the Monetary Policy Committee kept the one-week repo auction rate at 37 percent for a fifth consecutive meeting, with the overnight lending rate at 40 percent and the overnight borrowing rate at 35.5 percent. It named elevated energy prices amid geopolitical developments as an upward risk to the inflation outlook. The rate had stood at 37 percent since 23 January 2026, and the committee cut it to 36 percent on 22 October.
TCMB
What a family's food costs, September 2026
37,800.92 lira
TÜRK-İŞ put the monthly food bill for a family of four in Ankara at 37,800.92 lira, 1.10 percent more than in August and 35.14 percent more than a year earlier. It put a single worker's cost of living at 48,884.82 lira
TÜRK-İŞ
The minimum wage against prices, to July 2026
28,075 TL
The net minimum wage was set at 28,075 lira in January 2026 and no mid-year rise was granted, while the consumer price index rose 19.86 percent from December 2025 to July 2026. DW Türkçe calculates that the wage would have had to reach about 33,650 lira in July to buy what it bought in January
DW Türkçe
Lira per dollar, 8 October 2025
41.6330, the CBRT indicative buying rate
TCMB
Lira per dollar, 8 October 2026
49.1267, the CBRT indicative buying rate
TCMB
Consumer confidence, October 2026
84.8, down from 91.9 in September, which had been the highest reading since July 2018, and the lowest since January. All the sub-indices fell. A reading below 100 means consumers are on balance pessimistic.
Trading Economics
Foreign trade, September 2026
Exports 26 billion dollars, up 15.4 percent on a year earlier and the second-highest month on record after December 2025; imports 31.2 billion, up 5.9 percent; the monthly trade deficit narrowed 24.8 percent to 5.2 billion. Exports over the first nine months were 211 billion, up 5.2 percent
Hürriyet Daily News
Investment funds in liquidation, to 30 September
The Capital Markets Board ordered 131 investment funds into liquidation, affecting more than 455,000 investors. By 30 September warrants had been issued for 217 suspects, justice minister Akın Gürlek said, and price movements in 26 further stocks were being examined.
dpa
The first rate cut in nine months, 22 October 2026
36%
The CBRT cut its policy rate by 100 basis points to 36 percent on Thursday 22 October 2026, resuming easing for the first time since its January meeting, after holding at 37 percent for five consecutive meetings. The press release kept a cautious tone: the committee said it remains highly attentive to upside risks on inflation, and that in case of a significant and persistent deterioration in the inflation outlook, the monetary policy stance will be tightened. Gross international reserves fell 1.4 percent week on week to 169.1 billion dollars in the week to 16 October. Net international reserves stood at 51.5 billion dollars, down 10.7 billion over the five weeks since the fund turmoil began. The next committee meeting is on 10 December 2026.
Türkiye Today
What the 2027 budget assumes
Vice president Cevdet Yılmaz presented the 2027 budget proposal in Ankara on 16 October 2026. It assumes growth rising to 4.2 percent in 2027 from a projected 3.3 percent this year, against 3.7 percent in 2025; inflation of 28.4 percent by the end of 2026 and 21 percent by the end of 2027; and a current account deficit below 2 percent of GDP next year, from a projected 2.6 percent in 2026. Expenditure is set at 27.28 trillion lira against revenues of 23.41 trillion, a shortfall of 3.5 percent of GDP, or 2.8 percent excluding earthquake spending. The 2026 deficit is forecast at 3.1 percent of GDP against an initial 3.5 percent.
Hürriyet Daily News
September's budget deficit
The central government budget posted a deficit of 532 billion lira in September 2026, on treasury and finance ministry data released on 15 October. Revenues rose 22.7 percent year on year to 1.25 trillion lira while expenditure rose 34.1 percent to 1.79 trillion; non-interest expenditure rose 39.1 percent to 1.52 trillion and interest payments 11.2 percent to 263 billion. The primary deficit was 269.2 billion lira, 269 percent more than in the same month a year earlier. Over January to September the deficit was 1.84 trillion lira, and the primary surplus for the period fell 7.7 percent to 410.8 billion.
Hürriyet Daily News
The repayment law, and what the market did
Parliament passed legislation on 22 October 2026 establishing a framework to repay investors whose money is trapped in the 131 funds ordered into liquidation in September, whose assets were put at about 936.3 billion lira. Eligible investors may receive interim payments of up to 1 million lira, prioritising smaller investors and accounting for inflation, but the law guarantees nobody full compensation and leaves larger holdings uncertain. Treasury and finance minister Mehmet Şimşek said about 390,000 investor accounts would receive repayments. The law also seeks to recover assets allegedly removed unlawfully and to reclaim excess gains from investors who benefited from suspected manipulation. The next day Turkish stocks shed a further 527.6 billion lira, the BIST 100 fell by as much as 4 percent, circuit breakers were triggered in 365 shares and only two of the index's 100 constituents rose. The market value of the 581 listed stocks had fallen 3.6 percent to 14.3 trillion lira by mid-afternoon, about 6 trillion below its level of 15 September, and the BIST 100 had entered a bear market after losing more than 20 percent in a month.
Türkiye Today

What the comparison shows

Where they agree

TÜİK's index and ENAG's both show prices still rising, and both show the annual rate coming down. They differ on how fast prices are rising, not on whether they are. Government, bank and critics also point to the same source of cost pressure. Bolat puts the higher prices of energy and raw materials down to the fighting in the Gulf. The bank's September statement named elevated energy prices amid geopolitical developments as an upward risk, and the October release that came with the cut kept that warning.

Where they split

Three things are contested. The first is how much inflation there is. TÜİK put September at 29.73 percent over twelve months, while ENAG, an independent group of academics, put it at 46.61 percent. That is a gap of 16.88 points, narrower than the 18.74 points between the two July figures this page reported earlier, 31.75 and 50.49. Both series fell: ENAG's own August reading was 49.03 percent. The second is what the aggregate numbers mean. Exports set a September record at 26 billion dollars and the monthly trade deficit narrowed, while TÜRK-İŞ's food basket cost more than a month's minimum wage in September. The third is official: the government's inflation path for 2026 and 2027, 28.4 and 21 percent, sits above the central bank's own interim targets of 24 and 15 percent, set in May.

What nobody is saying

None of the official statements gathered here mentions the wage freeze. The net minimum wage was fixed in January and no mid-year rise was granted, while TÜRK-İŞ's food basket for a family of four reached 37,800.92 lira in September. Two other things go unsaid in the way the month's good news is told. Consumer confidence was reported as an eight-year high at 91.9 in September, and in October it fell to 84.8, below the 100 the same survey counts as neutral. And the 936.3 billion lira attached to the liquidated funds is an estimate of what those funds held, not of what investors paid in or will get back.

Who says what

Mehmet Şimşek, Türkiye's treasury and finance minister, who runs the disinflation programme

Points to the 0.4 point fall in the annual rate in July and says the rigidity in services inflation is easing. Says annual education and rent inflation are 31 and 34 points lower than a year earlier, and that 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
Source: Hürriyet Daily News · Monday, 3 August 2026
Ömer Bolat, Türkiye's trade minister, who publishes the monthly export figures with the exporters' assembly

Puts annualised goods and services exports at 401.1 billion dollars, and says the fighting in the Gulf and the attacks on shipping in the Black Sea and the Red Sea raised the prices of energy and industrial raw materials as well as freight and insurance costs. Calls the trade deficit tolerable and under control.

”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.
Source: TRT Haber · Monday, 3 August 2026 · Anadolu Agency's report of the 3 August briefing at the exporters' assembly, carried by TRT Haber
Fatih Karahan, Governor of the CBRT and first signatory of the open letter the bank owed the government after missing its 2025 target

Concedes that inflation in 2025 went outside the uncertainty band the bank sets around its 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. On the fund turmoil he says there is no systemic risk and that the bank will act further if it needs to, and at the IMF and World Bank meetings in Bangkok in October he said the outflows had not materially weakened residents' preference for lira assets. He grants one effect: the downturn could weaken the wealth effect that has been supporting demand and adding to price pressure.

Source: TCMB · Thursday, 19 March 2026 · The 2025 account is from the open letter at the source link. His October remarks on the fund turmoil, including those at the IMF and World Bank meetings in Bangkok, are reported by Türkiye Today in the piece cited under the rate cut in the key facts above.
TÜRK-İŞ, Türkiye's largest trade union confederation, which works out every month what a household food basket in Ankara costs

Argues that the disinflation has not reached low-income households. Its July figures put the twelve-month rise in its own food basket at 39.85 percent, against 37.53 percent for food in the official index that month. It reckoned a family of four then needed 120,325 lira a month to cover all its basic spending.

”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.
Source: TÜRK-İŞ · Thursday, 30 July 2026
ENAG, Enflasyon Araştırma Grubu, an independent group of academics that publishes its own consumer price index every month alongside the official one

Puts July inflation at 3.07 percent over the month and 50.49 percent over twelve months, well above TÜİK's 1.78 and 31.75 percent. Its own site did not answer when this page was checked on 30 October 2026, so the figures here are the ones DW Türkçe reports it published.

Source: DW Türkçe · Monday, 3 August 2026
Binhan Elif Yılmaz, Economics columnist for T24, who reads the detail behind the July headline against the market's reaction to it

Reads the detail behind the July figure: food up 1.61 percent in the month after 0.17 percent in June, and health up 10.74 percent after price adjustments. Warned in August that an early cut, made on the strength of cheaper oil and a rising stock market, could unsettle expectations again, because the cost pressure is coming from supply and not only from demand.

Source: T24 · Tuesday, 4 August 2026 · Her argument is summarised here rather than quoted. t24.com.tr answers 403 to every fetcher this site has, confirmed across four sweeps since 2026-09-13, so a quotation carried on it can never be re-checked, and an unverifiable quotation attributed to a named person is the one thing this paper does not ship. The column itself is live and opens normally in a browser: the citation is correct and is the primary source for her opinion.
Mehmet Nuri Ersoy, Türkiye's culture and tourism minister

Says Türkiye kept its tourism stable despite the negative effects of the war, and that the hardest quarter of the year is behind it. TÜİK's figures put tourism revenue 0.1 percent lower than a year earlier in the first half, at 25.75 billion dollars, with average spending per visitor up 2.5 percent in the second quarter to 1,005 dollars.

Source: Daily Sabah · Friday, 31 July 2026
Cevdet Yılmaz, Vice president of Türkiye, who presented the 2027 budget

Puts price stability first while forecasting faster growth. He expects growth of 4.2 percent in 2027 against 3.3 percent this year, and says fiscal discipline and incomes policies will continue to support monetary policy, with supply-side measures in social housing and food reinforcing disinflation. His inflation path, 28.4 percent by the end of this year and 21 percent by the end of 2027, sits above the central bank's own interim targets of 24 and 15 percent. He also says investment has outpaced private consumption, which has improved the composition of growth.

”Price stability is the fundamental priority of our program”Price stability is the fundamental priority of our program
Source: Hürriyet Daily News · Friday, 16 October 2026 · Said while presenting the 2027 budget proposal at the presidential complex in Ankara on 16 October 2026. Yılmaz spoke Turkish and the wording is the outlet's English rendering.

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