Inflation in Turkey: Housing and Food Drive Price Pressures

Photo: ING

Inflation in Turkey has slowed compared to last year, but price pressures remain acute. Rents and food costs are rising the fastest, while higher production expenses are laying the groundwork for further increases. As a result, the statistical slowdown does not translate into real relief for the economy or households.



From 2023 to 2025, Turkey’s inflation showed gradual deceleration. According to the Turkish Statistical Institute, in August 2023 monthly inflation stood at 9.09%, in 2024 at 2.47%, and in 2025 at 2.04%. ING analysts earlier forecasted a level closer to 1.5%, while market consensus was 1.8%.

Year-on-year inflation fell from 58.94% in 2023 to 51.97% in 2024 and 32.95% in 2025. Other measures showed similar trends: cumulative growth since December dropped from 43.06% (2023) to 21.50% (2025), while 12-month averages declined to 39.62%. This confirms that inflationary momentum is cooling, though levels remain above the Central Bank’s target of 25–29% by year-end.



Housing remains the main driver: rents rose 53.27% y/y, adding 8.12 percentage points to the index, while monthly growth added 0.46 p.p. Food prices climbed 33.28% y/y and 3.02% m/m, contributing 7.97 p.p. and 0.72 p.p. respectively.

Transportation also rose sharply: +24.86% y/y and +1.55% m/m, fueled by tariff hikes. Processed goods (including bread), alcohol, tobacco, and catering services contributed additional upward pressure.

Producer price inflation (PPI) increased 2.5% m/m and 25.2% y/y in August, driven largely by food and utilities. Despite upward momentum since April, the Central Bank’s currency interventions helped moderate cost growth.

Out of 143 tracked products, prices rose in 119 cases, fell in 20, and stayed unchanged in just 4 — a sign that inflation remains broad-based across nearly all household consumption categories.



Core inflation indicators show similarly high levels: Index A (excluding seasonal items) stood at 33.8%, Index B (excluding raw food, energy, alcohol, tobacco, gold) at 32.7%, and Index C (excluding food and energy) at 33%. Other modified indices (D, E, F) also remained in the 32–34% range. This indicates that structural problems, not temporary shocks, are fueling persistent inflation.

ING analysts expect inflation to end the year closer to 30%, unless unexpected shocks occur. Key risks include currency volatility, wage adjustments, price regulations, and global commodity market swings.

Political tensions may further complicate the Central Bank’s task, limiting flexibility in setting rates. As ING notes, monetary policy is likely to remain cautious, with decisions made step by step, which could slow disinflation and heighten risks to overall stability.