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God Morgon

Geopolitics · Europe · Sweden · Türkiye · the economy
Background

Inflation, the lira and the Turkish economy

Official inflation fell to 31.75 percent in July, but the central bank has not moved its policy rate since January, and it named rising energy prices when it last held the rate. Fuel is dearer than a year ago, ministers and the bank blame the war in the Gulf, and the net minimum wage has been frozen since January.

Petrol in Türkiye costs about 26 percent more than a year ago, diesel about 32 percent more. The central bank has not cut its policy rate since January, and in July it said energy prices had started trending up again. The net minimum wage has not moved either, while prices rose 19.86 percent.
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 the winding up of the accounts that had insured savers against a falling lira. The central bank, the CBRT (TCMB in Turkish), 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.

TÜİK, the statistics office, put July inflation at 31.75 percent over twelve months, down from 32.11 percent in June, and 1.78 percent over the month. Core inflation on the B index, which leaves out unprocessed food, energy, alcohol, tobacco and gold, was 30.98 percent. Food rose 37.53 percent over the year and housing 40.32 percent, both faster than the headline rate. Inflation ended 2025 outside the uncertainty band the bank sets around its target, so in March 2026 the CBRT sent the government the open letter the law requires.

The CBRT cut the policy rate to 37 percent on 23 January 2026 and has not moved it since. The way down was not straight. The rate reached 42.5 percent in March 2025, then went back up to 46 percent in April, after the bank said financial market developments were feeding into underlying inflation. Cuts resumed in July 2025 and ran to January. The lira lost about a seventh of its dollar value over the year to 6 August 2026, from 40.5932 to 47.5055 on the bank's own rates.

When the bank held the rate on 23 July it said energy prices had started trending up again. Trade minister Ömer Bolat dates the war to the end of February 2026, when fighting between the United States, Israel and Iran began in the Gulf. He blames it for higher energy, petrochemical and fertiliser prices. TÜİK's price collection put petrol at 65.4 lira a litre in July, about 26 percent above a year earlier, and diesel at 71 lira, about 32 percent above. Transport prices rose 2.59 percent in July alone.

The minimum wage has not moved: 28,075 lira net since January, with no mid-year rise, while consumer prices rose 19.86 percent over the first seven months. TÜRK-İŞ works out what a family's food basket in Ankara costs each month, and made it 36,940 lira in July, more than the wage. The bank's next move may hang on those energy prices, which move fast. On 4 August the T24 columnist Binhan Elif Yılmaz wrote that talk of US-Iran negotiations had already taken Brent from 91 dollars a barrel to 83.

502024-0347.52024-12452025-0142.52025-03462025-04432025-0740.52025-0939.52025-10382025-12372026-01
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 was on 23 January 2026, and the rate was held at 37 percent again on 23 July 2026, so the series is complete up to that meeting.
”The monthly food spending of a family of four, the hunger line, is 36,940 lira.”
TÜRK-İŞTürkiye's largest trade union confederation, which works out every month what a household food basket in Ankara costs

The numbers

Consumer price inflation, July 2026
31.75%
31.75 percent over twelve months and 1.78 percent over the month; the B index, which excludes unprocessed food, energy, alcohol, tobacco and gold, rose 30.98 percent over twelve months
TÜİK
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
Policy rate
37%
The one-week repo auction rate has stood at 37 percent since 23 January 2026; the Monetary Policy Committee held it there again on 23 July 2026, with the overnight lending rate at 40 percent and the overnight borrowing rate at 35.5
TCMB
The minimum wage against prices
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, 6 August 2025
40.5932, the CBRT indicative buying rate
TCMB
Lira per dollar, 6 August 2026
47.5055, the CBRT indicative buying rate
TCMB
Foreign trade, July 2026
$25.6bn
Exports 25.6 billion dollars, up 2.9 percent on a year earlier; imports 32.99 billion, up 5.2 percent. Trade minister Ömer Bolat put July's trade deficit at 7.3 billion dollars, and the January to July deficit at 60.5 billion on exports of 161.6 billion against imports of 222.1 billion. These are the figures he announced on 3 August
TRT Haber
Tourism income, second quarter 2026
15,865 million dollars, down 2.6 percent on the same quarter of 2025, with departing visitors down 5.1 percent to 15.58 million
TÜİK

What the comparison shows

Where they agree

TÜİK's index and ENAG's both show prices still rising. DW Türkçe, which publishes the two July figures side by side, says 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 and the attacks on shipping in the Black Sea and the Red Sea. The bank's own July statement says the same about energy prices, and Yılmaz writes that the Hormuz and Red Sea crises keep feeding logistics, oil and fertiliser costs.

Where they split

Two things are contested. The first is how much inflation there is. TÜİK put July at 31.75 percent over twelve months, while ENAG, an independent group of academics, put it at 50.49 percent, close to nineteen points higher. DW Türkçe publishes both and notes that the two use different data sets and different methods. ENAG's own site did not answer when this page was checked on 21 August 2026, so the figure here is the one DW reports. The second is what the aggregate numbers mean. Bolat announced a January to July trade deficit of 60.5 billion dollars, 8.2 percent wider than a year earlier, and called it under control. Tourism income fell 2.6 percent in the second quarter and departing visitors 5.1 percent, to 15.58 million. The tourism minister says stability was kept anyway. TÜRK-İŞ and Yılmaz argue from the household budget, where a family's food basket costs more than a month's minimum wage.

What nobody is saying

None of the official statements gathered here mentions the wage freeze. The net minimum wage was fixed in January, and DW Türkçe reports that it will not change again before the end of the year. On DW's calculation it would have had to reach about 33,650 lira by July to buy what it bought in January, a shortfall of roughly 5,600 lira. When the minimum wage does appear in government statements, it appears as a subsidy to employers. On 31 July Şimşek listed a monthly payment of 1,270 lira per worker among the reliefs for licensed tourism businesses.

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 over the month 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.

Source: TCMB · Thursday, 19 March 2026
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. Puts the twelve-month rise in the cost of its own food basket at 39.85 percent, against 37.53 percent for food in the official index. Reckons a family of four needs 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. Its own site did not answer when this page was checked on 21 August 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. Warns that cutting the rate early, 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.

”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
Source: T24 · Tuesday, 4 August 2026
Mehmet Nuri Ersoy, Türkiye's culture and tourism minister

Says tourism held steady despite the effects of the war. Visitor numbers fell in the quarter while spending per visitor rose 2.5 percent, to 1,005 dollars.

Source: Daily Sabah · Friday, 31 July 2026

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