Türkiye's annual inflation dipped below 30% for the first time in almost five years in September, official data showed Monday.

Consumer price growth eased more than expected to 29.73% last month from 31.51% in August, the Turkish Statistical Institute (TurkStat) said.

That marked the fourth consecutive month of decline, after the downward trend that started in mid-2024 stalled earlier this year following a sharp rise in energy prices caused by the Iran war.

Most surveys had expected the September annual reading to fall but remain above 30%.

"Annual inflation fell below 30% for the first time in 57 months," Treasury and Finance Minister Mehmet Şimşek said. Inflation was last below 30% in November 2021.

Şimşek said disinflation had spread across the board, with the exception of transportation.

Monthly price growth also came in below expectations at 1.84%, the same as in August, the TurkStat said.

Vice President Cevdet Yılmaz said the downward trend in inflation accelerated despite pressures stemming from external developments, led by the Iran war.

Some analysts said the September reading raises the prospect of an interest rate cut at the Oct. 22 meeting of the Central Bank of the Republic of Türkiye (CBRT).

The bank has kept its benchmark one-week repo rate at 37% this year, as it monitored ‌the inflation impact of the Iran war.

Monday's data showed transportation, education and housing prices were among the biggest contributors to the monthly inflation.

Transportation prices increased 2.79%, while housing, water, electricity, gas and other fuel costs rose 2.71%. Food and nonalcoholic beverage prices, one of the largest components of the consumer price index, fell 0.20% from the previous month.

Transportation contributed 0.49 percentage points to monthly inflation and housing added 0.33 percentage points. Food prices reduced the monthly reading by 0.05 percentage points.

Annual food inflation fell 8.4 percentage points from a year earlier to 27.6%, while education inflation declined 17.5 percentage points to 48.6%.

Şimşek attributed the declines to rules-based regulations.

Transportation costs rose 35.10% and housing prices climbed 39.99%, the data showed. Food, transportation and housing contributed 6.73, 5.96 and 4.84 percentage points, respectively, to annual inflation.

Annual rent inflation dropped 27.8 percentage points to 41.3%. "Leading indicators suggest that the decline in rent inflation will continue," Şimşek wrote on the social media platform X.

The core C index, which excludes energy, food and non-alcoholic beverages, alcoholic beverages, tobacco and gold, increased 28.70% annually and 2.14% monthly.

The B index, which excludes unprocessed food, energy, alcoholic beverages, tobacco and gold, rose 29% annually and 2.01% month-over-month.

The government is gradually phasing out the fuel tax adjustment mechanism for gasoline, following diesel, Şimşek said.

The so-called sliding-scale mechanism allowed reductions in the special consumption tax (ÖTV) to offset increases in global oil prices due to the U.S.-Iran war and limit their impact on domestic fuel prices and inflation.

Citing central bank calculations, Şimşek said inflation would have been 7 percentage points lower this year if it had not been for the Iran war.

Yılmaz said they're "closely monitoring" the potential impact of developments in the region and on a global scale on domestic prices through energy and commodity costs.

"To limit the spillover of these developments into domestic prices and enhance our economy's resilience to external shocks, we continue to implement our monetary, fiscal and revenue policies in close coordination," he wrote on X.

Last month, the government unveiled an updated Medium-Term Program (MTP), which projects a year-end inflation of 28.4%, compared to 16% estimated last year.

Officials said the war in the Middle East had played a key role in the upward revision.

Inflation is projected to fall to 21% next year, 13.5% in 2028 and 9% in 2029, according to the MTP.

Şimşek says the government is continuing policies to increase housing and food supply, adding that easing persistence in services inflation, particularly rents and education, alongside a weakening impact from commodity price increases, would support disinflation in 2027.

"We aim to bring inflation back down to single-digit levels by anchoring inflation expectations in line with our targets and leveraging the gains from our supply-side policies," said Yılmaz.

"We expect the downward trend in inflation to become more pronounced as the impact of supply-side shocks weakens and with the support of the coordinated policies we are implementing."