Turkish Central Bank Survey Shows Diverging Inflation Expectations

Turkey's Central Bank's August survey reveals a split in inflation expectations for the coming year. Market participants anticipate a slight decrease, with their 12-month inflation expectation falling to 23.69% from 23.95% in July. However, expectations among the real sector and households have climbed.

The real sector's inflation expectation rose by 0.30 points to 32.80%. For households, the outlook is even more concerning, with their 12-month inflation expectation jumping by 0.64 points to 45.58%. The proportion of households expecting inflation to fall in the next 12 months also decreased, dropping to 16.85% in August.

Looking back a year, the trend shows a different picture. In August 2025, market participants expected 22.84% inflation. By August 2026, this expectation has risen to 23.69%. Conversely, the real sector's expectations have fallen from 37.70% to 32.80% over the same period. Household expectations have also seen a significant drop, from 54.07% to 45.58% compared to a year prior. This divergence highlights ongoing uncertainty about Turkey's economic future.