There is no deterioration in Türkiye's disinflation path but rather a slowdown mainly due to food prices and seasonal effects, Treasury and Finance Minister Mehmet Şimşek said Friday.
The downward trend continued in January as annual inflation eased to 30.7%, but a monthly spike of nearly 5% in consumer prices triggered market doubts about whether the course seen throughout 2025 is on track.
"Türkiye can speak of a slowdown in disinflation due to transitory effects, but not of any deterioration," Şimşek told an interview with private broadcaster NTV.
The higher-than-expected monthly increase in January was driven by new-year adjustments and food and drink prices.
"It would be a very wrong assessment to say the disinflation program is stalled just by looking at the first few months,” Şimşek said.
Price increases are expected to remain lofty near 3% this month, and policymakers said a limited annual increase in headline inflation may be seen, with food prices again weighing.
But they expect the main trend to approach the lower November-December levels from March onward.
According to Şimşek, the cost of living remains Türkiye's most pressing macroeconomic challenge, reiterating the government’s commitment to implementing its economic program.
"Currently, the most important imbalance is inflation; we continue to implement the program with great determination," he noted.
"We have two main priorities: structural transformation and the fight against inflation."
As annual inflation slowed from levels above 40% at the beginning of last year, the Central Bank of the Republic of Türkiye (CBRT) slashed its key rate by 900 basis points in five steps since last summer.
But its last move – a smaller-than-expected 100-basis point cut to 37% in January – and the monthly spike in consumer prices raised some expectations the bank could slow its more than year-long easing cycle.
CBRT Governor Fatih Karahan struck a confident tone, however, saying last week that while the policy stance needed to remain tight, the inflation outlook is "not that negative," which analysts took as a signal that there were more rate cuts ahead.
But Karahan said the threshold to increase the size of rate cuts from 100 basis points is "a bit high" and cautioned that more easing was not a given.
The CBRT nudged up its year-end inflation forecast range to 15%-21% and maintained its interim 16% target. The increase from the earlier 13%-19% range accounted for a change in data calculations and energy and food prices, Karahan said.
The bank also left its end-2027 interim inflation target at 9%, in a forecast range of 6%-12%, and it targets 8% by end-2028.
Officials, including Şimşek, have repeatedly said they would want to see inflation dip below 20s by the end of this year. Market participants surveyed by the central bank last month forecast it at 23.23%.
On Friday, Şimşek addressed concerns about price rigidity in the services sector, saying that the issue is not structural inflexibility but rather a process that takes time to adjust.
He said, among others, there has been no change in supportive fiscal, monetary and income policies, adding that public debt management has improved and the structure of borrowing is being strengthened.
Şimşek said Türkiye has largely brought its current account deficit under control and placed it on a sustainable trajectory. However, he cautioned, achieving a sustained current account surplus will take more time.
He added that once uncertainty related to Iran eases, energy prices are likely to resume a downward trend, which would positively affect Türkiye’s current account balance, disinflation process and growth outlook.
Oil prices traded near six-month highs on Friday, poised for their first weekly gain in three weeks on growing concern over potential conflict after U.S. President Donald Trump said "really bad things" would happen if Iran does not agree to a nuclear deal in a matter of days.
The major oil producer lies opposite the oil-rich Arabian Peninsula across the Strait of Hormuz, through which about 20% of global oil supply passes. Conflict in the area could limit oil entering the global market and push up prices.
Şimşek said international investor interest in Türkiye remains strong, highlighting increased policy consistency and predictability.
He added that he plans to visit Japan in March to meet real‑sector business groups to discuss possible direct investment in Türkiye.
According to Şimşek, the private sector will be able to access more and cheaper financing after 2026.
He also stated that there is no new tax agenda this year regarding corporate tax, income tax, or value-added tax.
