Central Bank Raises 2026 Year End Inflation Forecast to 28 Percent
The Central Bank of the Republic of Turkey has raised its forecast for year end inflation in 2026 from 26 percent to 28 percent. Central Bank Governor Fatih Karahan announced the new forecast during his presentation of the Inflation Report 2026 III on August 13.
Geopolitical Risks Continue to Affect Inflation
Karahan said geopolitical developments have remained volatile since the Central Bank’s previous inflation report in May.
Energy prices continue to influence global inflation, while slower global growth is expected in 2026. The Central Bank is closely monitoring the effects of geopolitical risks, energy prices and developments in the global economy on Turkey’s inflation outlook.
Inflation Trend Improved in July
The Central Bank reported some improvement in the underlying inflation trend in July. However, its longer term trend inflation indicator remained relatively stable.
Food inflation was highlighted as a particular concern. Despite an overall improvement in the outlook for food production, food prices have recently diverged negatively from the broader inflation trend.
Energy prices also rose again in July as geopolitical uncertainty increased, and early indicators suggest that these effects continued into August.
Services Inflation Continues to Slow
Despite supply side shocks, the slowdown in services inflation continued. Weaker domestic demand contributed to this trend, with rent and education services playing an important role.
Transportation services, however, recorded strong price increases during the first seven months of the year, partly because of higher fuel prices. Inflation in communication services has also strengthened recently.
Tight Monetary Policy Continues
The Central Bank said it continues to maintain a tight monetary policy stance and is using macroprudential measures focusing on Turkish lira deposits, credit growth and liquidity management.
Credit growth, which accelerated during the final quarter of 2025, slowed significantly from the second quarter of 2026.
The new 28 percent forecast indicates that the Central Bank expects the disinflation process to continue, but at a slower pace than previously anticipated.
