Turkey CPI Inflation Rate: Data, Forecast & Trends

As of April 2025, Turkey's year-on-year (YoY) Consumer Price Index (CPI) stood at 37.90%. This marks a slight moderation from 38.10% in March 2025 and a significant decline from the peak of 85.40% in October 2022. While the decline from its peak is notable, the current rate remains exceptionally high, far exceeding the Central Bank of the Republic of Turkey's (CBRT) year-end inflation forecast of 24% for 2025. This persistent inflation continues to erode purchasing power and poses a substantial challenge to economic stability.

A deeper look into the components reveals the widespread nature of Turkey's inflationary pressures. In April 2025, several categories continued to show substantial price increases. While specific April 2025 component data is not yet fully detailed, previous months' trends highlight the key drivers. In March 2025, education saw an annual increase of 80.4%, housing rose by 68.6%, and hotels and restaurants increased by 43.4%. Healthcare also contributed significantly with a 42% rise.

These figures illustrate that inflation is not merely confined to energy or food but is deeply embedded across various sectors, reflecting strong demand, significant cost-push factors, and pervasive inflation expectations. The "core goods inflation," considered a better indicator of underlying trends, stood at 20.3% YoY in April 2025, while services inflation, less affected by currency fluctuations but more by domestic demand and minimum wage increases, remained elevated at 54.6% YoY. The sustained high inflation in services, despite a slight easing from earlier peaks, indicates strong domestic demand and wage indexation effects. Food inflation, a persistent concern, was still at 36.09% YoY in April 2025, though this was a moderation from previous months.

On a month-on-month (MoM) basis, Turkey's CPI increased by 3.00% in April 2025, following a 2.46% increase in March. This monthly acceleration, while slightly below some market expectations, still indicates significant ongoing price momentum.

The monthly increase in April was driven by various categories. Food and non-alcoholic beverages continued to be a significant contributor. Housing, transportation, and health also showed notable monthly increases. The clothing and footwear category saw a monthly increase of 1.02% in April, influenced by new seasonal collections. This strong monthly growth, even after a prolonged period of high inflation, signals the entrenched nature of inflationary pressures and the ongoing challenge for policymakers to break the cycle. The pass-through from exchange rates to prices has also been pronounced lately, contributing to monthly inflation.

Turkey's average annual inflation rate for the calendar year 2024 stood at a 58.51%, one of the world's highest rate. This elevated figure underscores the persistent and significant price pressures facing the Turkish economy. The substantial inflation rate reflects the ongoing impact of various factors, including robust domestic demand, expansionary fiscal policies, and the depreciation of the Turkish Lira.

Despite efforts by the Central Bank of the Republic of Turkey to combat inflation through aggressive interest rate hikes, the effects have been gradual. High government spending, particularly before local elections, also contributed to the sustained price increases. The cost of living continued to rise significantly for Turkish citizens across essential goods and services, indicating that inflationary challenges remain a dominant concern for policymakers aiming to restore price stability and rebuild economic confidence.

Turkey's inflation history is tumultuous, marked by frequent double-digit figures and, at times, hyperinflationary spirals. In the early 1990s, annual inflation rates were routinely above 60%, even surpassing 100% in 1994. This period was characterized by chronic fiscal deficits, loose monetary policy, and political instability.

The early 2000s saw efforts to stabilize the economy, leading to a significant drop in inflation to single digits by the mid-2000s. This was largely due to a combination of orthodox macroeconomic policies, including fiscal discipline, structural reforms, and a stronger commitment to an inflation-targeting regime by the Central Bank.

However, from 2017 onwards, Turkey entered a new phase of elevated inflation. Annual rates consistently remained in double digits, driven by a series of currency crises, rising commodity prices, and, critically, an unconventional monetary policy stance championed by President Erdogan, which advocated for lower interest rates to combat inflation – a view contrary to conventional economic theory. This heterodox approach, which saw the CBRT significantly cut interest rates even as inflation soared, led to a sharp depreciation of the Turkish Lira and an explosion in prices. Inflation peaked at an astounding 85.4% in October 2022, marking a multi-decade high.

The shift back to orthodox policies began after the May 2023 elections, with the appointment of new economic leadership. Since then, the CBRT has aggressively hiked interest rates in an attempt to restore price stability and rebuild credibility. This sharp tightening has led to the recent deceleration in inflation from its peak, though it remains stubbornly high.

In Turkey, monitoring core inflation is particularly critical due to the high volatility of headline figures driven by exchange rate fluctuations and administrative price adjustments. The CBRT closely tracks various core inflation measures (often referred to as CPI-C or similar aggregates that exclude energy, food, alcoholic beverages, tobacco, and gold) to identify the underlying and persistent components of inflation.

In April 2025, core inflation (CPI-C) stood at 37.12% YoY, down from 37.42% in March. This indicates that while headline inflation is declining, underlying price pressures remain very strong. The fact that core inflation is only slightly below the headline rate underscores that the inflationary problem is not simply due to volatile energy or food prices but is deeply ingrained across the economy.

The stickiness of services inflation (54.6% YoY in April 2025) is a key concern for core inflation. Services prices are less susceptible to exchange rate pass-through but are more influenced by domestic demand, wage increases, and inflation expectations. The high rate in this category suggests that the inflation problem is now largely domestically generated, driven by strong demand and the pass-through of past cost increases and a strong wage-price spiral. Businesses, having experienced years of high inflation, are quick to adjust prices upwards, and wage negotiations often include significant increases to compensate for past and expected inflation, further fueling the cycle.

Despite the recent pivot to orthodox policies and the moderation from peak levels, several significant risks continue to threaten Turkey's inflation outlook:

• Credibility of Economic Policy and Inflation Expectations: The greatest risk lies in the sustained credibility of the current orthodox economic team. While the CBRT has implemented aggressive rate hikes, years of unconventional policies have deeply entrenched high inflation expectations among businesses and consumers. Any perceived deviation from tight monetary and fiscal policies, or a return to heterodox approaches, could immediately reignite inflationary pressures and lead to renewed lira depreciation. The CBRT's current year-end inflation forecast of 24% for 2025 implies a steep disinflation path that requires strong commitment.
• Exchange Rate Volatility: The Turkish Lira remains highly vulnerable to both domestic and external shocks. Geopolitical events, changes in global risk appetite, or renewed political uncertainty in Turkey could trigger sharp depreciations of the Lira. Given Turkey's import dependence, a weaker currency rapidly translates into higher imported inflation, offsetting the CBRT's efforts. The recent strength of the US dollar has also added pressure.
• Fiscal Policy and Public Spending: While the government has expressed a commitment to fiscal consolidation, significant public spending, particularly ahead of potential elections or in response to social pressures, could undermine disinflationary efforts. Large government expenditures can increase demand, leading to higher prices, and signal a less disciplined approach, further hurting inflation expectations. The ongoing reconstruction efforts following the devastating earthquakes also pose a significant fiscal burden.
• Wage-Price Spiral and Indexation: With inflation having been so high for so long, there is a strong tendency for wages and other prices to be indexed to past or expected inflation. Recent substantial minimum wage hikes and public sector wage increases, while necessary for protecting purchasing power, can create a self-reinforcing wage-price spiral. This makes it difficult to break the cycle of high inflation, particularly in the services sector.
• Global Commodity Prices: Turkey is a net importer of energy and many raw materials. A resurgence in global commodity prices, driven by geopolitical events (e.g., conflicts in the Middle East, disruptions in energy supply) or robust global demand, could reignite cost-push inflation, making the CBRT's disinflation efforts even harder.
• External Financing and Capital Flows: Turkey relies on external financing to cover its current account deficit. A tightening of global financial conditions, or a loss of investor confidence in Turkey, could lead to capital outflows, putting downward pressure on the Lira and increasing borrowing costs for the government and businesses, further exacerbating inflationary pressures. While the CBRT has recently seen some foreign exchange inflows, sustaining these inflows is crucial.

Turkey Inflation Data