Confidence that inflation will continue to ease in Türkiye strengthened among financial circles and the real sector in January, while household expectations edged higher, according to a survey released on Monday.
Among market participants, expectations for annual inflation 12 months ahead fell by 1.15 percentage points from the previous month to 22.2%, the survey by the Central Bank of the Republic of Türkiye (CBRT) and Turkish Statistical Institute (TurkStat) showed.
Expectations among manufacturing industry representatives dropped even more sharply, down 1.9 percentage points to 32.90%, suggesting that firms are increasingly pricing in a slowdown in cost pressures over the year ahead.
In contrast, households’ inflation expectations rose by 1.18 percentage points to 52.08%, remaining above both current inflation levels and expectations in other sectors.
However, the survey also showed a modest improvement in sentiment within households.
The share of respondents who believe inflation will slow over the next 12 months increased by 1.64 percentage points to 26.17%, suggesting early signs of easing pessimism despite the rise in headline expectations.
Tight monetary and fiscal policies in place since mid-2023 have helped lower inflation, which ended 2025 at 30.89% annually, the lowest rate since November 2021.
Treasury and Finance Minister Mehmet Şimşek on Monday said the overall downward trend in inflation expectations was continuing.
Compared with the same period last year, 12-month-ahead inflation expectations in January fell by 6.7 percentage points among households, 10.9 points in the real sector and 3.2 points among market participants.
Şimşek said elevated household expectations were not unique to Türkiye, stressing that in many countries, consumer expectations tend to run above realized inflation and underlying trends.
Türkiye's central bank expects inflation to fall to its 16% interim target by the end of 2026, with a projected range of 13%-19%.
Market surveys estimate it to decline to about 23%, which Şimşek said still points to a significant improvement compared with the current inflation level.
Şimşek said monthly inflation could increase in January due to seasonal and temporary factors, but added that the government expected further progress in disinflation over the course of the year.
"With the progress achieved in disinflation throughout the year, we expect expectations to improve further, easing price-setting rigidities and making a stronger contribution to the decline in inflation," he said.
Economists have also said inflation readings beginning in January could be volatile, mainly given new-year price updates and a 27% rise in the minimum wage for 2026.
That, among others, appeared to have prompted the central bank to lower its key interest rate by a less-than-expected 100 basis points to 37% last week.
The CBRT said leading indicators suggest monthly consumer inflation has firmed in January, driven mainly by food prices, but stressed that the increase in the underlying inflation trend remains limited.
The rate cut at the bank's first policy meeting of the year marked its fifth consecutive easing move since last summer.
The CBRT has lowered rates by a cumulative 900 basis points since then, and by 1,300 basis points since 2024, when it had held rates at 50% for most of that year to wrestle down inflation expectations.
