Turkish citizens' inflation and dollar expectations shift

Turkish citizens' inflation expectations for the next 12 months have dipped to 44%, down from 45% in July, according to Koç University's Household Inflation Expectation Survey. This continues a downward trend in future inflation outlooks. However, the perception of past inflation has climbed two points to 53% in August, potentially signaling future inflation data. The average expectation for the US dollar against the Turkish Lira in 12 months has risen to 62.1 Turkish Liras, up from 59.9 in July. The survey also noted a correlation: as currency expectations rise, so do inflation expectations. Those anticipating the dollar to remain below 49 Liras expected 41% inflation, while those expecting it to exceed 80 Liras projected 50% inflation.

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The downward trend in household inflation expectations continued in August.

Beyond gold, which remains the most preferred savings tool at 47%, interest in other savings options has grown. Investment fund preferences increased from 23% to 28%, and the Individual Pension System (BES) saw a rise from 19% to 23%. Stock market interest grew from 23% to 25%, foreign currency purchases from 20% to 24%, and time deposits in Turkish Lira from 34% to 36%.

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The average expectation for the US dollar against the Turkish Lira in 12 months was calculated as 62.1 TL in August.

Looking at a three-year horizon, the 20-30% annual inflation range is the most prominent expectation, with 23% of participants falling into this category, up from 21% in previous months. Another 19% expect inflation between 30-40%, while 16% anticipate inflation exceeding 60%.

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As the currency expectation rises, inflation expectation also generally increases.