ISTANBUL, Jan 28 (Reuters) – Turkey’s monthly inflation rate is expected to rise sharply to 4.32% in January, driven by the annual hike in the minimum wage and various new year price adjustments, while the annual rate is seen slowing further, a Reuters poll showed on Wednesday.
The median estimate of 12 economists sees annual inflation declining to 30.0% in January, with forecasts ranging from 29.9% to 30.4%. The forecasts for monthly inflation range between 4.2% and 4.64%.
According to the poll’s median estimate, annual inflation is expected to slow to 23% by year-end, remaining above the central bank’s forecast of 16%.
Economists have said the annual changes in the inflation basket weightings, which will be set this month, made forecast calculation difficult. They also said food prices will also impact the inflation in January.
Last month, the statistics institute said in line with European standards, the base year for the consumer price index will change to 2025 from 2003. The institute also said while the weightings of the main groups will not change this year some changes will be made to smaller groups in the inflation basket.
Last week, the central bank lowered its key interest rate by a less-than-expected 100 basis points to 37%, citing firming inflation, and pricing behaviour and expectations that threaten the disinflation process.
The central bank said leading indicators suggest that monthly consumer inflation has firmed in January but the rise in the underlying trend of inflation is limited.
After a brief policy reversal early last year due to political turmoil, the central bank’s rate-cutting cycle resumed in July with a 300-basis-point move, followed by cuts of 250 points and then 100 in October amid rising food prices, before the last two cuts of 150 in December then 100 points in January.
Thanks to tight monetary and fiscal policies, inflation fell to 30.9% in December from an annual high of 75% in 2024.
Consumer prices rose only 0.89% in December but given a series of new-year price updates and a 27% rise in the minimum wage for 2026, inflation readings beginning in January are expected to be volatile.
Morgan Stanley said the weather-related pressures on food inflation and the stickiness in services inflation have stalled the decline in the underlying inflation trend since May 2025.
“We expect gradual disinflation to 21.7% at end-2026, and 17.7% by end-2027. This disinflation path is supported by stable FX, moderate domestic demand and improving inflation expectations,” Morgan Stanley said in a recent note.
The Turkish Statistical Institute will release December inflation data at 0700 GMT on February 3.
(Polling by Zeynep Berkem and Ezgi Erkoyun; Editing by Daren Butler)
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